The stagflation | 30 May 2022

30 May 2022, GBP/USD

The stagflation

GBPUSD trading plan:

The Bank of England fears a tight labor market will limit the economy's growth potential and put fresh upward pressure on wages, making it harder to bring inflation back to its target. People have dropped out of the workforce not for want of jobs: the number of job vacancies advertised exceeded the number of those looking for work for the first time on record this year and the unemployment rate is the lowest since the 1970s. Instead, Britain has seen a sharp rise in people reporting long-term sickness - potentially due to the after-effects of high rates of COVID - as well as an exodus of older workers and more full-time study by the young. The Bank of England is not sure any of these factors will turn around soon. And with the pool of European Union workers no longer readily available after Brexit, labor shortages risk trapping Britain in a stagflation rut.

Investment idea: sell 1.2656 and take profit 1.2580.

David Johnson
Analyst of «FreshForex» company
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