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market analysis
The dollar rose three times, and the pound "falls back to reality"
Wonderful introduction:
Walk out of the thorns, there is a bright road covered with flowers; when you reach the top of the mountain, you will see the cloudy mountain scenery like green clouds. In this world, a star falls and cannot dim the starry sky, a flower withers and cannot desolate the whole spring.
Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: The US dollar rose three times, and the pound "falls back to reality". Hope it will be helpful to you! The original content is as follows:
On Friday (September 19), the pound continued to fall sharply against the US dollar, and the US market hit a low of around 1.3460 before the market. The yield on the 30-year British gold-edge bond jumped more than 1%, reaching 5.50%. Coupled with the www.xmtraders.combination of "orderly loose and unsolid economy" www.xmtraders.communication between the US data and the Fed, the pound led the decline among major currencies. The exchange rate retreated from the high point of 1.3726, approaching the lower edge of the previous oscillation range, and entered the stage of dominant short-term market sentiment of "short fundamentals + weaker technical aspects".
Britains
British end: fiscal constraints are amplified again
In August, the UK's public sector net borrowings of 18 billion pounds were the highest in the same period in the past five years, significantly higher than the market expectations of 12.8 billion pounds; the widening fiscal gap has brought about a passive upward trend in the medium and long-term interest rates, and the yield on 30-year gold-edged bonds is close to 5.50%. The rapid rise in yields usually suppresses exchange rates through three paths: "financing costs - growth expectations - currency risk premium", which is unfavorable to the valuation of the pound in the medium and long term. The market begins to include the possibility of reducing spending or increasing taxes in the fall budget, or both, which will reconstrain growth and consumption.
British monetary policy: The pace of nominal easing is "slower"
The Bank of England announced that the quantitative tightening scale from October 2025 to September 2026 was 70 billion pounds, lower than the debt unloading speed of 100 billion pounds in the past 12 months; the policy interest rate remained unchanged at 4% at 7-2 votes, and continued "gradual and cautious" loose www.xmtraders.communication, while pointing out that inflation pressure peaked around September by about 4%. A slow pace helps stabilize financial conditions, but the spread advantage of the pound has not improved despite the still sticky www.xmtraders.combination of fiscal and inflation.
USA: IncreaseLong resilience and marginal cooling of labor force coexist
In August, US retail sales increased by 0.5% month-on-month (expected 0.4%) and 0.7% year-on-year (expected 0.6%), and the July data was revised down from 1.1% to 0.8%; demand for non-store retail and clothing and shoes remained stable. During the same period, 231,000 people initially requested unemployment benefits (240,000 expected, 264,000 people were worth the previous value), indicating that the labor market has cooled down but has not stalled.
The Federal Reserve lowered interest rates by 25 basis points this week to the range of 4.00%-4.25%, the first adjustment this year, and also implying that there is still room for interest rate cuts this year; Powell said that "the risk balance has changed", but did not send out urgent easing signals. The US dollar index rose for three consecutive days, trading above 97.50, and the US dollar stabilized temporarily, which put external suppression on the pound.
Short-term catalysis
San Fed Chairman Mary Daly spoke in an early morning on Saturday, saying that the market will track his statement on the pace of subsequent interest rate cuts; if the wording still emphasizes "data dependence + gradual", the US dollar may continue to be strong and the pound will find it difficult to get back funds.
Technical aspect:
From the daily chart, the upper rail of the Bollinger band is 1.3636/middle rail 1.3512/lower rail 1.3387. The exchange rate has fallen below the middle rail and is moving closer to the lower rail, indicating that the process of mean regression and turning to the downward deviation is unfolding; the previous highs 1.3788 and 1.3726 form the upper double resistance zone, passively establishing the recent downward trend line slope.
In MACD, DIFF and DEA are both bonded around 0.0026, and the bar chart is ≈0.0000. The convergence of kinetic energy indicates that the previous rebound has weak and exhausted, and it is more likely to cause amplification and retracement to bad news in the future. RSI is 46.4775, located below 50 but far from touching the oversold line of 30. A typical "weak oscillation-not extreme" pattern: space is not exhausted, and time still needs to be exchanged for direction confirmation.
In terms of structural position, the 1.3512 middle rail has transformed from dynamic support to resistance; the first thing to do below is to pay attention to 1.3387 (Bollinger's lower rail) as the first support. If it is lost, the low point 1.3140 may be backtested. On the upward trend, 1.3512 is a short-term long-short watershed. Only by breaking up and stabilizing can the mean be restarted and return to the upward trend. The higher resistance is 1.3636 and 1.3726-1.3788 dense zones in turn.
Preview of Market Sentiment
The duration interest rate jump caused by fiscal data triggered the repricing of the risk premium of the pound, and the risk budget of funds for pound assets quickly contracted; at the same time, the US dollar stabilized under the narrative of "rate cuts but not rush", forming a reversal of relative attractiveness to non-US.
Future Outlook
Short-term (several days-a week)
Short situation: If the US dollar index remains above 97.50, Daly's speech does not send out stronger easing signals, and at the same time, the British political-fiscal agenda continues to revolve around the tight constraint narrative of spending/tax, the pound may slowly descend along the Bollinger's lower track, and the 1.3387 line will face volume testing; fall below andIf the volume is increased, the range 1.3248-1.3140 may enter the backtest.
Bulner situation: If the US data falls marginally or the Fed releases an unexpected dovish with a "faster pace" approach, the US dollar will fall in stages, and if there is a signal of fiscal improvement or inflation falls faster on the UK side, the pound may return to above 1.3512 to make a technical rebound, and then launch a rebound to 1.3636.
Key Observation: The gains and losses of the price around 1.3512 and the closing pattern (whether it is retracted above the middle track) will determine whether it is a sideways consolidation or a downward continuation.
The above content is all about "[XM Forex]: The US dollar rose three times, and the pound "falls back to reality". It was carefully www.xmtraders.compiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
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