Forza Cable?
While the blockbuster safe haven currencies, the yen and swissie have been the best performing majors so far this month, sterling is holding its own in third place.
And now, much of the world is looking at the UK and England in particular.
This is not because its football team were unable to break its 55-year wait for a major tournament success, or even due to the country’s reaction to it.
All eyes are on PM Johnson’s “virus gamble” as the Conservative leader confirmed plans yesterday to remove all remaining Covid-19 restrictions from next Monday.
This comes in spite of a surge in cases expected across the country soon which is sparking some fear and unease.
UK data out this week
We get tier one economic figures released this week in the form of UK CPI and jobs numbers. Another move above target, buoyed by the economy reopening, is forecast by analysts in the inflation figures. But the data is set to be volatile over the next few months with spikes potentially pushing CPI above 3% later in the year.
UK unemployment is expected to tick up to 4.8% in May. However, the furlough scheme continues to help the labour market and its removal in September will be a seminal moment in how high unemployment goes.
Cable trying to break the June downtrend
After Friday’s bullish surge higher, we can see clear bullish divergence on the charts with the daily RSI tracking higher as new lows were formed. Prices have broken trendline resistance from the June highs and the major pair was trading above a previous swing high. The 100-day SMA looms above at 1.394 but another day of consolidation could see a bull flag forming and the prospect of higher prices.
Much may depend on US inflation data later today, with a strong report pushing the pair back towards the congested 1.3750-1.38 trading zone. There is obvious support here, with traders also watching the UK data and rising infection rates to see if this increases pressure on the UK’s health service and potentially more lockdowns.