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no trick is expected from the Bank of England

Most market participants are positive about the further dynamics of the British currency. According to experts and traders, the British regulator will maintain the current monetary policy, which will allow the GBP to stay afloat. Let’s remind that on Thursday, May 6, a meeting of the Bank of England on monetary policy (MP) is scheduled. The decision made by the regulator will be the second most important after the publication of the American payroll. According to economists, the leading British bank will maintain the current monetary policy parameters. It is possible that at the same time the regulator will improve the previous economic forecast. At the same time, there is a high probability of a partial reduction of the quantitative easing (QE) program, but the chance of improving economic forecasts is much higher. On Thursday morning, May 6, the pound remained stable against the American and European currencies. On the eve of the meeting of the Bank of England, sterling was trading near 1.3907, which is higher than the closing level of trading on Wednesday (1.3905). Currently, the GBP / USD pair is cruising around 1.3909, trying to reach new highs. According to experts, if the Bank of England extends the QE program and raises forecasts for the recovery of the national economy, then the GBP / USD pair has every chance of breaking above 1.4000 and conquering new peaks. Such a development of events is possible if the risk sentiment improves, experts say. On Thursday, May 6, the GBP / USD bulls started to attack, but they faced a strong resistance level of 1.3914 on their way. Experts admit strengthening of bullish sentiments in tandem in case of breakdown of this resistance level. Most market participants are sure that the Bank of England has no reasons for pessimism. Such factors as mass vaccination against COVID-19 and active recovery of the national economy add to the positive. At the moment, the UK is among the leaders in the rate of immunization of the population: more than 50% of Britons have received at least one dose of the COVID-19 vaccine, and the second stage of vaccination is on the way. At the same time, the economy of the United Kingdom is ready for the complete lifting of restrictions, scheduled for June 21, 2021. According to analysts, the elimination of quarantine restrictions will be a powerful driver of growth in the British economy. Many experts are confident that the Bank of England will not only improve economic forecasts, but also lay the foundation for reducing the volume of the QE program. According to preliminary forecasts, its reduction is possible by the middle of summer. Analysts believe that this will help resume the rally in the pound. Note that over the past six months sterling has been trading in an uptrend. The current rally in GBP reflects the preparation of market participants for a possible hawkish policy of the Bank of England. Combined with the strong recovery of the American economy and the active economic “recovery” of the euro area, the prospects for the British economy are increasingly improving. Experts are confident that the Central Bank of England can wind down the QE program ahead of the Fed and the ECB, as well as raise interest rates faster. However, if during the meeting the regulator revises previous forecasts and expresses concerns about the national economy, then the GBP / USD pair may sink. In case of opposite actions of the Central Bank of England and a positive decision following the meeting, the tandem will be able to strengthen. – Source: InstaForex

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