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Powell's ultimatum
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Hello everyone, today XM Forex will bring you "[XM Forex Market Analysis]: Ultimatum for the long and short pounds of British Powell". Hope it will be helpful to you! The original content is as follows:
Before the US market on Tuesday (September 23), the British pound sterling was 1.3500-1.3520 against the US dollar, and the short-term volatility converged. The background is that the UK's PMI clearly weakened in early September and fiscal pressure rose. After the Federal Reserve opened its first 25 basis point interest rate cut this year last week, the market is waiting for Powell's speech to the initial value of the US S&P Global PMI in September later to judge the subsequent path of the US dollar and the relative strength of the pound.
Fundamentals: The "scissors gap" between the two ends widens - the UK's momentum slows down, the US dollar has temporarily stopped but has not surrendered
In the UK, S&PGlobal data shows that the initial xn--xm-6d1dw86k.comprehensive PMI in September fell to 51.0, less than the expectation of 52.7, and lower than the expected 53.5 in August; the manufacturing PMI fell to 46.2 (expected 47.0), continuing to be in the contraction range; the service PMI fell to 51.9, lower than the expected 53.5 and the previous value of 54.2. Chris Williamson, chief economist at S&P Global, bluntly stated that the latest survey shows a xn--xm-6d1dw86k.combination of "weaker growth, decline in overseas orders, lower confidence and intensified job losses." The slowdown in fundamentals is fermenting at the same time as the accumulated fiscal constraints previously: rising public debt and rising gold-edged bond yields have weakened the growth prospects and opened up space for the possibility of an increase in tax burden in the fall budget in November. The latest data shows that net borrowing in the public sector increased to £18 billion, a five-year high, and this "fiscal-growth" mismatch has formed a structural drag on the pound.
At the monetary policy level, the Bank of England maintained its policy interest rate at 4% last week as expected, and once again emphasized the "gradual and cautious" easing rhythm. For the market, this meansThe British Bank of China is "unwilling to bet on strong easing too early", but the weakening of the economy has heated up the game of further interest rate cuts, and the interest rate spread advantage of the pound is difficult to build a certain buffer.
Over the Atlantic Ocean, the US dollar has fallen temporarily but it is hard to say the turn. The US dollar index (DXY) is currently hovering cautiously around Monday's lows, at about 97.30, after failing to stand firm above 97.85 for three consecutive days, and then quickly fell.
Last week, the Federal Reserve cut interest rates by 25bp for the first time in 2025, and guided another "two" rate cuts this year; many FOMC members identified it as "preventive measures for slowing employment", and reminded that inflation is still higher than the 2% target, and subsequent expansion needs to be cautious. In contrast, director Stephen Miran put forward a more radical view - he believed that policy interest rates should be lowered by about "two percentage points" toward the appropriate range of the mid-2%. Powell's speech in the early morning of Wednesday and the US xn--xm-6d1dw86k.comprehensive PMI expectation of 54.6 in September (announced at 21:45 on Tuesday) will be the key watershed to determine whether the US dollar will "recover or recover" or "continue the decline." At the exchange rate level, if the US dollar only retraces a technical retracement, the rebound space of the pound will be limited; if the US dollar restarts the downward band, the pound will be able to achieve a good wind.
Technical aspect:
From the daily chart, the pound pound is running close to the middle rail of the Bollinger band (26,2), and the middle rail of the Bollinger is about 1.3510, which almost coincides with the current price of 1.3516, and technically forms the "mean magnetic level". The upper and lower rails are basically at a level and have a mild bandwidth, which implies that they are consolidation markets in the near future, and the volatility is in a neutral contraction stage. The rebound from the low point of 1.3140 did not form a sustained trend in early September, and encountered resistance around 1.3594, then surged to 1.3726 and then fell back. The previous high of 1.3788 was not rewritten, and the morphology showed a mild decline wedge/top edge suppression feature of "gradually moving down at a high level" in shape.
Indicator end, in MACD (26, 12, 9), DIFF0.0018, DEA0.0024, histogram-0.0011, that is, DIFF has slightly penetrated DEA and turned negative, indicating that the short-term kinetic energy divergence and retracement pressure are still there; RSI (14) is about 50.0, located near the boom and bust line, with neutral momentum but slightly weak. xn--xm-6d1dw86k.comprehensive judgment: Middle track 1.3510 becomes an instant hub. If you stand firmly above the middle rail, the exchange rate will challenge 1.3594 again and point to the upper resistance zone of 1.3726/1.3788; if the gap between the middle rail and the Bollinger lower rail is lost, pay attention to the support belts of 1.3387 (near the Bollinger lower rail) and 1.3332. Further retracement still requires prevention of back-testing of the key low point of 1.3140. As for the trend line and K-line chart pattern, it is more like a game between mean regression and box oscillation. Unless there is an effective breakthrough in large volume, it is difficult to unilaterally.
Prevention of Market Sentiment
The exchange rate is "clipped" above the Bollinger's middle track, which does not reflect the direction consensus, but the position rebalancing. On the one hand, the UK PMI weakens and fiscal agreementThe "British Pound Market Sentiment" has cooled down, and macro funds have raised the risk premium requirements for the pound; on the other hand, although the Federal Reserve has cut interest rates, the official wording has not made a promise of "fast easing", and the confidence of the dollar bears is marginally limited.
From a cross-market perspective, rising gold-edge bond yields mean that the pound interest rate spread does not form enough advantages, and the foreign exchange market's "carrying returns" is average. Powell's speech and the US PMI are the most important incident risks in the near future. The long and short will respond quickly with the three-stage logic of "data-guidance-price": if the data is strong and the guidance is cautious, the market tends to "buy the US dollar to cover"; if the data weakens and guides dovishly, the pound may receive "emotional boost". Overall, emotions are in a cautiously optimistic shock zone, rather than one-way excitement or panic.
The above content is all about "[XM Forex Market Analysis]: British Pound Long and Short and Powell's Ultimatum". It was carefully xn--xm-6d1dw86k.compiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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