The UK economy is going through a rough patch as inflation remains stubbornly high.
Despite the rising recession odds, the GBP/USD pair has done relatively well in the past few months as it jumped by more than 5% from the lowest point in March and 20% from last year’s low.Economic data published last week showed that the UK economy is not doing well. While the jobs data published on Tuesday were strong, other numbers revealed that the economy was struggling.
The headline and core CPI remained above 10% in March, making it one of the highest level in Europe. Food and energy prices remained at an elevated level during the month. As a result, it seems like soaring inflation has pushed more people to go back to work as the labor participation continued rising.
At the same time, high inflation is having an impact on the country’s retail sector. On Friday, data showed that retail sales dropped in March. Core sales have now dropped for several consecutive months. Department and retail sales were among the worst performers. Therefore, it is evident that the UK economy is going through a stagflation period. Stagflation is defined as a period when slow economic growth coincides with a period of highThere will be no major economic data from the UK this week. Therefore, the focus will be on the upcoming corporate earnings from the US and select economic data from the US. The Conference Board will publish the next consumer confidence data on Tuesday.
Further, the pair has moved slightly below the key resistance point at 1.2450, the highest point on January 23rd.Therefore, the pair will likely have a bullish breakout as buyers target the keyReady to trade our
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