The following story tells about the currency from New Zealand, cargo code: GBPUSD, as of 0750 minutes on November 8, Malaysia time, the exchange rate of GBP is 1.22911< /p>
Under the double blow of soaring interest rates and rising unemployment, British households have begun to tighten their spending, and the British economy may have entered the shadow of recession. The latest analysis from Bloomberg Economics shows that in the second half of this year, the probability of a mild recession in the UK economy is 52%. A mild recession is defined as two consecutive quarters of economic contraction.
The research, co-authored by economists Dan Hanson and Andrej Sokol, was released on Monday and provides a preview ahead of the official release of gross domestic product (GDP) data on Friday. If a recession materializes, it will cause headaches for Prime Minister Rishi Sunak, who is running for election next year. A sluggish economy could prompt the Bank of England to consider cutting interest rates, especially if inflation eases significantly.
Economists expect UK GDP to have fallen 0.1% in the three months ending in September, according to a Bloomberg survey on Friday. Meanwhile, the Bank of England predicts that the current unemployment rate of 4.3% may rise to 5.1% in the next few years. Hanson pointed out: "We are facing a delicate balance between economic stagnation and mild recession, but the possibility of leaning slightly towards the latter is more likely.
There is a risk that the decline in economic output may be sharper than we expect. "Bloomberg Economics' models already include a mild recession scenario in their forecasts, with the model showing a 70% chance of a contraction in the third quarter, a forecast based on a 0.6% decline in GDP in July and only a partial rebound in August. data. In its forecast last week, the Bank of England estimated a 50% chance of recession.
The forecast is based on a model that uses high-frequency data and historical experience to assess the distribution of risks to near-term prospects for growth. UK households are likely to increase their savings as the labor market relaxes and consumers become more cautious about spending, as evidenced by recent money and credit data from the Bank of England.
At the crossroads of the British economy, every step is extremely cautious, and various data will provide clearer clues to the country's economic direction in the next few days.
When we analyze the exchange rate trend of the pound against the US dollar (GBP/USD), the main factors to consider include macroeconomic Indicators, monetary policy expectations, market sentiment and other factors that may affect the value of a currency. The following are some considerations for GBP/USD trading strategies based on reported information and economic principles:
Economic Fundamental Analysis:
Recession expectations: Reports indicate that the UK may have entered a recession, which typically weakens the value of the country's currency. A recession could lead to lower foreign investment and capital outflows, which could therefore be negative for the pound.
Interest rate outlook: Potential interest rate cuts mentioned in reports may further weaken the appeal of sterling, as lower interest rates reduce the returns of holding sterling assets.
Inflation and Monetary Policy: If inflation falls significantly, the Bank of England may be more inclined to adopt loose monetary policy to stimulate the economy, which may have a negative impact on the pound.
Technical Analysis Considerations:
Trend Analysis: Against this macroeconomic backdrop, technical analysts may be looking for a downtrend and key support levels in GBP/USD.
Key Levels: Analysts will watch for exchange rates to approach important psychological or historical levels, such as 1.30 or 1.25.
Momentum indicators: Use momentum indicators such as RSI and MACD to determine whether the market is oversold and may provide buy or sell signals.
Trading strategy suggestions:
Short-term trading: If GBP/USD is expected to continue falling, traders may consider a short-term short-selling strategy while setting strict stops to control risk.
Long-term investment: Long-term investors may wait for clearer signs of economic recovery or policy changes before deciding to enter the market.
Risk Management: Given the uncertainty, it is critical to maintain appropriate position sizing and risk management strategies in case breaking news or data changes market sentiment.
Data attention: Pay close attention to the upcoming GDP data and the Bank of England's remarks to adjust trading strategies.
Conclusion:
In the current economic environment, the trend of GBP/USD may be biased to the downside, but market sentiment and upcoming economic data can have a significant impact on the exchange rate. Traders should remain flexible and ready to adjust their strategies to new market information. At the same time, apply appropriate risk management measures to protect yourself from adverse market fluctuations.
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