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The pound is trading with multidirectional dynamics during the morning session, keeping close to the local highs of May 5. The growth of the instrument is still supported by some weakness of the US currency, as the demand for it is gradually decreasing as there are signals about further tightening of monetary policy in Europe and the UK. Earlier, the President of the European Central Bank (ECB), Christine Lagarde, announced the readiness of the regulator to curtail the quantitative easing program in June, and then launch a cycle of raising the interest rate, which would help curb a sharp rise in inflation.
Significant pressure on the dollar position was exerted by weak macroeconomic statistics from the US, published the day before. Durable Goods Orders slowed from 0.6% to 0.4% in April, worse than analysts' neutral forecasts, while Nondefense Capital Goods Orders excluding Aircraft, rose only 0.3% over the same period after an increase of 1.1% in March. Average market forecasts assumed a slowdown to 0.5%.
According to a study by Loughborough University, the rapid inflation in the UK, which reached 9% in April, had the most negative impact on the living standards of families with children. Prices for consumer goods and services have risen by an average of 400 pounds MoM, or 13% YoY, with food prices up 9.3% over the past year and childcare costs up 6.7%. Meanwhile, chief executive of Ofgem, the independent energy regulator for Great Britain, Jonathan Brearley, has predicted a further 42% increase in electricity tariffs by October, adding more than 800 pounds to the average annual bill. Thus, already next winter, about 9.6 million British families will face a fuel shortage, since about a tenth of the family budget will be directed to pay for electricity.
Bollinger Bands in D1 chart show moderate growth. The price range expands, freeing a path to new local highs for the "bulls". MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic, being at its highs, is again trying to reverse downwards, indicating risks of overbought GBP in the ultra-short term.
Resistance levels: 1.2600, 1.2674, 1.2800, 1.2900 | Support levels: 1.2500, 1.2400, 1.2250, 1.2163
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