GBP/USD: Sterling eases after BoE decision

Peter Bukov Axiory Global Ltd.

The pound slipped after the Bank of England monetary policy decision on Thursday, with the GBPUSD pair falling circa 30 pips in the initial reaction, bringing the cable back below the 1.27 level. Nevertheless, the pair was still up 0.5% on the day, boosted by the weakening dollar.

As widely expected, the BoE left monetary policy unchanged, with all nine MPC members voting unanimously to keep the rate at 0.75%.

The following statement did not bring anything surprising as the central bank acknowledged that rates have fallen materially further, while inflation is likely to fall below the 2% target this year. This might be interpreted that the BoE will join the other central banks in easing monetary policy, despite promising to tighten it.

On Wednesday, the Fed confirmed it is ready to cut rates as soon as in July, with markets now pricing in a 100% probability of this to happen. Additionally, two other rate cuts are expected by market participants till the end of the year.

Moreover, the US central bank removed reference to being "patient" on rates while adding that "uncertainties" around its outlook have increased, even if did not warn of "material downside risks" to outlook.

Finally, for 2019, eight Fed officials see lower rates with seven of them seeing two cuts this year (and one seeing one cut). At the same time eight see unchanged rates and one sees a rate hike.

The greenback dropped sharply after the dovish FOMC decision, while stocks and bonds rose.

From the technical point of view, it looks like the bearish trend could be over for now (mainly due to the US dollar weakness). As long as sterling trades above 1.2670, the short-term outlook could be bullish.

Another stronger support seems to be in the 1.2640 - 1.2610 region.

On the upside, the selling offers will most likely be located at 1.2740 and 1.2760 and if the pound jumps above these levels, stop losses could be hit, which might push the currency further higher.

More importantly, the medium-term trend could switch back to bullish if the GBPUSD pair closes above 1.2760 on a daily basis.

Author

Peter Bukov

Axiory Global Ltd.

Peter Bukov is one of Axiory’s leading analysts. He has a master’s degree in Corporate Finance and is highly sought after as a teacher of Forex trading at various universities in Slovakia.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.