GBPUSD and EURUSD: The Bank of England follows a gradual policy of stimulating the economy. The euro is returning to the

Trading 05 Nov 2020 Donner votre avis

The British pound is expected to rise against the US dollar on the background of another expansion of the program of assistance to the economy, which everyone has been waiting for a long time. However, the increase was more due to the fact that the regulator did not touch on the issue of introducing negative interest rates, which everyone fears at the beginning of next year. This gives traders hope that this method of stimulating the economy will not have to be resorted to at all.

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As I noted above, the monetary policy committee of the Bank of England announced an increase in the government bond purchase program by 150 billion pounds. Now the total volume of purchases will be 895 billion pounds. The key interest rate remained unchanged at 0.1%.

It is also worth noting that all members of the monetary policy committee supported an increase in bond purchases. The Bank of England also noted that they will not tighten policy until they see clear signs of a reduction in spare capacity. If necessary, the regulator is ready to do whatever is required of it. Particular emphasis was placed on the worsening outlook for inflation. According to forecasts and taking into account the introduction of quarantine measures for November this year in the UK, GDP is likely to decline in the 4th quarter of this year.

Bank of England Governor Andrew Bailey was brief in his speech. In his opinion, there is now a steady indirect impact of the coronavirus on the economy, and most likely, UK GDP will return to the level of 2019 no earlier than the 1st quarter of 2022.

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The pound "swallowed" all of this, along with expectations of the results of the US election, which will have a larger short-term impact than even today's decision on interest rates. As for the technical picture of the GBPUSD pair, buyers are targeting the highs of this week, the breakout of which will open a direct road to the levels of 1.3230 and 1.3320, which will indicate the formation of a new upward trend.

The European currency also did not miss its moment and added against the US dollar, as faith in the victory of Joe Biden in the US presidential election continues to push fans of risky assets to rash actions.

Today's forecast from the European Commission convinced investors that everything is not as bad as it might seem. The report indicates that the Eurozone's GDP will shrink by 7.8% in 2020, rather than by 8.7%, as predicted earlier this summer. But as for 2021, the forecast for Eurozone GDP growth in 2021 was revised to 4.2% from 6.1%. Growth of about 3.0% is expected for 2022.

The beautiful figures on inflation that were drawn by the European Commission are unlikely to come true, but why not dream about it. And if the option of growth in 2021 and 2022 by 1.1% and 1.3% still corresponds to reality, then the November quarantine measures in the Eurozone due to the coronavirus will seriously hit consumer activity, which may push inflation in the EU at the end of the year to zero. The EC forecasts its growth by 0.3%.

As for unemployment, the European Commission also has special views on it. Considering the programs of assistance to the population in Germany, France and a number of other developed countries, the more optimistic expectations of 8.3% against the background of the new wave of coronavirus clearly seem inappropriate in the current situation. But in 2021, it is expected to rise to the level of 9.4%, and here we can not disagree because of the curtailment of the above programs.

To sum up the report, the European Commission believes that the future is surrounded by extremely high uncertainty, and the balance of risks for forecasts for economic growth is shifted to the negative side.

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Another report that shows what problems await the Eurozone in the future concerns retail sales. According to the data, retail sales in the Eurozone in September this year fell by 2.0% compared to August. On an annualized basis, sales jumped 2.2%. The slowdown in the economic recovery and the increase in coronavirus infections are unlikely to have a positive impact on this indicator in the fall.

As for the technical picture of the EURUSD pair, the growth continues as the expectation of Biden's victory in the elections increases. At the moment, the bulls are focused on the resistance of 1.1865, a break of which will open a direct road to the 19th figure, and then not far from the test of the maximum of 1.1970.

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

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