It seems that market participants get used to soaring gas prices on the spot market in Europe. Recently, the price has risen above $1,000 per thousand cubic meters. Surprisingly, the market reaction was rather muted. At least the euro showed quite a modest decline. Yet, the pound sterling plunged due to new headwinds in the UK. In addition to the gas shortage before the heating season, the UK is facing a fuel shortage. Long lines of cars can be seen at the gas stations. At the same time, many people are trying to buy more fuel. They fill the tanks of their cars as well as all kinds of cans and even empty water bottles. The reason for such a panic is the gasoline shortage due to disruptions in supply chains. Notably, the panic started when gasoline disappeared at a number of gas stations. After difficulties with gas supplies, people feared that gasoline may soon disappear as well. So, it is not surprising that people rushed to gas stations in order to buy as much gasoline as possible, ignoring the fact that it is happening because of delayes in the supply chains. If the situation does not normalize, then the government will have to impose restrictions on the sale of gasoline, which may only aggravate the situation. Nevertheless, the pound sterling is likely to regain ground as panic will subdue sooner or later. Perhaps the pound sterling may assert strength amid the publication of mortgage loans data today. The number of mortgage approvals is expected to drop to 75,000 from 75,200. Mortgage volumes in the UK are likely to grow by £3.5 billion. In addition, consumer loan volumes may increase by £0.2 billion. All readings indicate an increase in consumer activity, which is the engine of economic growth.

UK Mortgage Lending:

Yesterday, the pound sterling faced strong selling pressure. As a result, it declined by more than 180 pips. This is a very sharp price change for a short period of time.

The RSI indicator has dropped below 15, which has not been seen in the market for a long time. This is a signal that the pair is extremely oversold.

Judging by the daily chart, there is a prolongation of the downward movement from the beginning of June. The quote is already moving at the levels of January 2021.

Outlook:

Bearish sentiment is still strong in the market. Yet, on the back of the oversold status, the price rebounded. Experts believe that there may be an increase in the volume of short positions after the price fixes below 1.3510.

A comprehensive indicator analysis gives a buy signal on the short-term time frames amid a temporary price pullback. Technical indicators give a short signal on the intraday and medium-term charts due to a downward movement.