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GBP/USD and EUR/USD: the Bank of England may change the course of monetary policy at this meeting. The implementation of

Today is an important day for the British pound, as it fell heavily against the US dollar, losing all the positions it won after the victory of the Conservative Party of Great Britain. Many expected the pound to continue growing after a slight downward correction, however, this week's reports indicate a slowdown in economic growth. Moreso, the actions of the British Prime Minister related to the Brexit agreement, frightened investors, which led to a downward correction of the trading instrument. It has long been said that the British pound is significantly overbought, and that a downward correction is expected in due time. As always, the market went against the expectations of speculative traders.

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Today, the pound's direction depends on the decision of the Bank of England. In my past reviews, I have repeatedly mentioned the possibility of interest rate cuts as early as next year, which is the point that will be given full attention on today's meeting. At least two members of the Committee are expected to vote to lower the interest rate, which will shake the current course of monetary policy. Many world economic agencies already say that the Bank of England is likely to lower interest rates in 2020, rather than raise them, as it was also stated at the last meeting. Such a decision will put pressure on the British pound and will constrain the yield of short-term UK government bonds.

Of course, during today's meeting, the Committee may maintain a wait-and-see position in the short term, however, such decision will likely be the first signal to the revision of policy in the future, which will weaken the position of the pound . The Bank of England is forecasted to cut interest rates by 25 basis points in May 2020.

Also note that the situation with Brexit delivers not a few problems. The recent hints of the government, in the person of Boris Johnson, saying that the measures of fiscal stimulus will not be implemented soon, may force the Bank of England to file a memorial to lower the key interest rate in the coming months.

As for the technical picture, the GBPUSD pair remains unchanged, and their further direction will depend on how traders will act in the support area of 1.3060 and in the resistance area of 1.3135. A break of 1.3060 will increase the pressure on the trading instrument, and will quickly push it into the area of new lows at 1.3000 and 1.2950. If the Bank of England remains in the same course, there is a possibility in returning to the resistance of 1.3135, which will hit the stop orders of sellers and throw GBP / USD higher to the highs of 1.3200 and 1.3260.

EUR / USD

Yesterday WSJ economists published a survey regarding the situation in the labor market. It said that the market will remain favorable, allowing US GDP to demonstrate growth in the 4th quarter at 2.2% per annum. US growth is also forecasted to slow to 1.8% in 2020, but the likelihood of a recession has declined.

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The New York Federal Reserve Bank President John Williams, on his speech in CNBC, also did not make a novelty in the expectations associated with the course of Fed policy. He noted that the economy in 2020 will demonstrate the same good dynamics as in 2019, and the task of the Fed is to maintain the economy on its current course. As for the results of 2019, according to the representative of the Fed, the Commission has effectively adjusted policy, and the current course of monetary policy is now correct.

Experts are still talking about the trade agreement, where the first phase of which was allegedly concluded at the end of last week. It is already clear that the sentiment in the agricultural sector has improved slightly, as many market participants are skeptical about China's promises.

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If we analyze these past years, the maximum export of agricultural products from the United States to China was recorded in 2014, with the figure approaching 25 billion dollars. How the Chinese side will seek to increase this figure to $ 50 billion remains a mystery. Some economists believe that in order to reach the declared target, the Chinese government needs to allow American energy exports to its market and open up the services market, which clearly, no one will do.

Of course, no one will rush into conclusions on the deal, since two years are allocated for its implementation and increase in export volumes. It is only after the presidential elections in the United States, which will be held at the end of 2020, will judgement on whether China has managed to fulfill its obligations be possible.

As for the technical picture of EUR / USD, the pair's situation has not changed significantly. The bears managed to push the market to their side, but failed to form a larger downward trend. While trading is conducted below the resistance of 1.1135, which acts as the middle of the side channel, we can expect a decrease in the trading instrument in the area of lows 1.1090 and 1.1040. If the bulls manage to get to the level of 1.1135 and get the help from fundamental statistics that can be expected only in the second half of the day, sellers of risky assets will most likely retreat from the market and allow it to update the upper boundary of the side channel in the area of 1.1175.

The material has been provided by InstaForex Company - www.instaforex.com