Global macro overview for 11/07/2017:
Recent economic data from the UK is not optimistic and the gap in economic expansion between the Eurozone and the UK is getting bigger. The recent comments from Bank of England Governor Mark Carney regarding a possible interest rate hike do not have any support in underlying economic data. This is why the forecast for the British Pound is being perceived in the darkest colors. The GBP/USD pair is likely to fall on weakening UK economy, which will force the market to limit the probability of a rate hike. The pound sterling would be particularly sensitive to easing wage growth. Their negative dynamics in real terms is an obvious indication of the basic pillar of the British economy: consumption.
Today, the financial markets will have a chance to respond to two important speeches. The first will be made by Bank of England Chief Economist Andy Haldane, who has recently spoken out for an interest rate hike. Maintaining his current point of view will not be a surprise. More information may include the words of BoE Vice Governor Ben Broadbent, who represents the neutral part of the MPC. The instability of the political scene after the June election and the fact that the Brexit process will be painful can also be reminded by Theresa May in her speech to celebrate the anniversary of taking office. The BBC reported yesterday that its key point would be to turn to other political factions to submit their proposals regarding the context of the EU Brexit negotiations.
Let's now take a look at the GBP/USD technical picture on H4 time frame before the speeches are concluded. The market is trading in a downward sloping parallel channel between the levels of 1.2853 - 1.3029. In case of any hawkish comments from any of BoE dissidents, the next technical resistance is seen at the level of 1.2982, but the overall bias remains bearish.
