Incomplete UK data puts pressure on sterling

The GBP/USD hit a resistance after hitting a high of 1.2447 since early June last year, and is currently down about 0.15%. The market's willingness to boost economic growth failed to impress sterling buyers. Markets may be expecting the Bank of England to tighten monetary policy too much this year, removing any upside for sterling in the coming quarters.

The U.S. Commodity Futures Trading Commission CFTC foreign exchange commercial position report shows that as of 2023-01-24, the long position of the British pound (hand) decreased by 3,368 hands to 127,207 hands;

UK Chancellor of the Exchequer Hunt has angered his Conservative Party by promising to tackle the country's weak productivity with post-Brexit fiscal reforms to boost growth, but he will also insist on tax increases some MPs. He is preparing to announce a growth plan in his March budget statement after stabilizing financial markets roiled by a ""mini-budget"" last year. In addition, he intends to use Friday's speech to counter rhetoric about a recession in the UK and focus on growth sectors.

According to foreign media reports, Hunt will reject calls from some Conservative MPs to cut taxes as a way to stimulate economic growth. Earlier, Hunt told other ministers he must stick to the fiscal guidelines he outlined in November to help keep inflation down.

British Chancellor of the Exchequer Hunt told the cabinet that it is difficult to bring the inflation rate below 5% this year. He believes that the government must stick to fiscal discipline in the March budget. Hunt offered a mixed forecast, saying he was starting to see signs of economic recovery and that inflation had passed its peak and so far had fallen faster than expected. But headline inflation is struggling to get below 5% this year due to stubborn price increases for food, goods and services.

The HM Treasury, Energy Markets Finance Scheme has not received any applications and is closed. The scheme was launched by the Treasury and the Bank of England last year to help energy companies cope with soaring energy prices. Prices on the wholesale gas market have fallen significantly since the scheme was introduced, taking some of the pressure off eligible energy companies, the Treasury said. The department and the Bank of England will continue to monitor developments in energy markets, they said in a statement. The project was previously scheduled to be open for applications from October 17 last year to January 27 this year.

The Bank of England will announce its monetary policy decision The market expects the Bank of England to raise interest rates by 50 basis points; this round of interest rate hike cycle will end with a 25 basis point rate hike in March. A dovish BoE comment should drive EUR/GBP crosses higher on the day; the BoE is expected to raise (policy rate) by 50bps on Feb 2, bringing it to 4.00%. EUR/GBP will initially edge lower on a dovish 50bps rate hike, with the BoE highlighting the dire state of the UK economy in its statement to support forecasts that the market is pricing in too much aggressiveness.

At present, the market expects the Bank of England to reach the peak of this round of interest rate hike cycle of 4.40% in June 2023. Combined with a hawkish 50 basis point rate hike from the European Central Bank later in the day, the market expects EUR/GBP to move higher afterwards, closing higher than it opened.

In a recent research report, the strengthening of the resilience of the UK economy and progress on the Northern Ireland Agreement are further reasons for a more optimistic outlook for the pound. It follows a period of underperformance for the pound, one of the worst-performing major currencies in the December 2022 period. The underperformance was partly to blame for the Bank of England, which raised interest rates by 50 basis points in December 2022, but warned that there were downside risks to the economy and a further slowdown in rate hikes may be needed. The Bank of England has frequently disappointed market expectations by raising rates less than investors expected in 2022, or issuing distinctly downbeat economic forecasts.

Data from the real estate online website Rightmove show that the average monthly rent for new tenants across the UK (except London) has reached a record high of 1,172 pounds, and the typical private rental rent in London has also hit a record high of 2,480 pounds per month. The average monthly rent for a center has exceeded £3,000 for the first time. There are signs competition among tenants is starting to ease as more homes become available for rent, but the imbalance between demand and supply remains large, the website said.

The average asking price of new listings across the UK will rise by a further 5% by 2023 unless there is a substantial increase in the number of homes available to rent. Douglas & Gordon director of sales and leasing James Redington said they were seeing the highest rent increases in decades and did not expect this growth to slow down anytime soon.

The daily K-line chart of GBP/USD shows:

The bullish momentum maintains a narrow range at high levels, the market as a whole is bullish, short-term or entangled with high-level consolidation, the upper suppression focuses on around 1.25515, the low-level support focuses on around 1.21825, the MACD indicator is in the high-level consolidation in the bullish area, and the RSI indicator is on the upper side of the 50 balance line The long zone hovers, like:

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