GBPUSD is moving in an Ascending channel and the market has reached the higher low area of the channel, Market has reached the horizontal support area of the Minor Box pattern.
The UK is all set to release their PMI data and analysts are expecting the results to be just the same as last month. We previously saw higher than expected numbers which boosted the GBP markets, and we expect to see the same this time around as well. Although inflation is still in the double digits, BOE members believe it will come down once the labor market and energy crisis cools down soon.
The UK – Energy Crisis
According to the government, the steps that ministers have taken to address the problem with energy bills have put the United Kingdom at risk of missing a major objective to source green electricity and are compromising the country’s goal of reaching net-zero emissions. As part of the strategy to bring annual carbon emissions down to zero by 2050, the government stated in 2021 that one of its goals was to ensure that all domestic power came from low-carbon sources by the year 2035.
EURGBP is moving in the Descending channel and the market has reached the lower high area of the channel.
However, the National Audit Office (NAO) issued a warning on Wednesday that the government has made little progress in producing a long-term delivery plan to boost clean energy sources because of the energy crisis, which began in late 2021 and was exacerbated by Russia’s invasion of Ukraine. The energy crisis began in late 2021 and was exacerbated by Russia’s invasion of Ukraine. As a result of the transition away from the use of fossil fuels in automobiles and heating systems, it is anticipated that the demand for electricity will rise by up to sixty percent by the year 2035.
The United Kingdom has established the year 2035 as the goal date for the prohibition of the installation of new gas boilers; nevertheless, attempts to persuade families to choose low-carbon alternatives have faltered thus far. In response to concerns that the spike in wholesale gas prices would make it impossible for many homes and companies to pay their energy bills, the government began providing bill subsidies towards the end of the previous year.
Labor Market Crisis
Before the global financial crisis of 2008, the BOE said that productivity was the primary engine behind the average annual growth rate of 2%. Following then, output plummeted to a mere 0.5 percent. Yet, throughout that time period, the total supply potential of the economy was held back by high levels of immigration, changes to benefit programs that pushed more individuals to seek employment and an increase in the number of people who began working later in life. Each of those components has now begun to move in the other direction.
GBPCAD is moving in the Descending triangle pattern and the market has fallen from the lower high area of the pattern.
According to the forecasts made by the BOE, there is currently a problem in labor supply and productivity, with around 500,000 more working-age persons who are not actively participating in the labor force than before COVID.
Brexit has also contributed to the problem by reducing the number of EU workers that come to work in the UK. With the outbreak of the COVID disease, another indicator has been the rapid increase in the number of persons reporting inactive owing to long-term illness. This may indicate that the drop in involvement will continue for a longer period of time than was originally expected.
BOE Bailey – Cost of Living
Governor Andrew Bailey from the Bank of England recently gave a speech where he discussed the cost of living and struggles faced by the people in the UK today. He reveals, “The latest release of data for the UK consumer price index showed an annual increase of 10.1% in January. It is down from a peak of 11.1% in October, not least because direct effects from energy prices have eased.
GBPJPY is moving in an Ascending channel and the market has rebounded from the higher low area of the channel.
But also, core inflation, which excludes the most volatile components of the consumer price index, fell more than expected to 5.8% in January. The Bank’s Monetary Policy Committee spends a lot of time poring over these data. Consumer price inflation remains much too high, and it is our job to bring it back down to our 2% target. That is why we have increased Bank Rate by nearly 4 percentage points over the past 15 months.”
“To set the appropriate level of Bank Rate over the months ahead, we have to monitor our progress toward our target very carefully. But the data can only tell us so much. At times like these, more than ever, it is important to hear the human stories behind the data. These stories help us understand both what is actually going on and the impact it has on people’s lives. The MPC’s inflation target sits within the Bank’s wider mission – set out in our founding charter from 1694 – to promote the good of the people of the United Kingdom. These are not just words from an old charter. It is the heart and soul of what we do. It is therefore important to us to listen to what the people of the United Kingdom have to say. We also talk to financial market participants through our market intelligence gathering, and our Agents travel to all corners of the country. We join them regularly in this work. I personally go on visits to each of the 12 regions and nations of the UK at least once a year to hear from businesses and organizations first-hand.”
The UK – Grocery Inflation
According to industry figures released on Tuesday, supermarket inflation in the United Kingdom reached 17.1% in the four weeks leading up to February 19, setting a new record high and handing the latest blow to consumers already battling with a cost-of-living crisis. It was stated there would be an increase of 811 pounds added to the annual shopping expenses of households in the UK if they did not adjust their behavior in order to save costs.
GBPCHF is moving in the Descending triangle pattern and the market has fallen from the lower high area of the pattern.
According to him, the company’s study indicated that the public views growing energy costs as the single most critical financial concern, followed by rising grocery prices. Also, one in four persons reports that they are having trouble making ends meet, which is an increase from one in five during the same time period last year. After a challenging year in 2022, British consumers can expect their finances to be more strained in 2023 as the government reduces its help for home energy costs and as mortgage rates continue to increase.
However, official data that was just released this month showed that overall consumer price inflation in the UK fell to 10.1% in January. This is the lowest reading since September, and confidence data that was just released last week showed that consumers have become more upbeat about their personal finances.
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