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The pound rose amid rumors of a new UK labor market support program. ECB leaves monetary



DATE OF PUBLICATION: 2021-01-21 17:13:10 The British pound, after yesterday’s sharp drawdown in pairing with the US dollar, has made progress today and updated another annual maximum. The statements made by UK Treasury Secretary Rishi Sunak and announced plans to expand support for the labor market and unemployed in the UK in the coming months have definitely sparked demand for the British pound among investors who are betting on its further strengthening in the medium term. The isolation measures that the UK authorities resorted to back in November last year are already affecting the labor market and continue to harm businesses and companies, which only exacerbates the unemployment situation in the future. Let me remind you that the main government support program, worth 60 billion pounds, from which pays up to 80% of the wages of those workers who remain in their places, expires at the end of April. Sunak’s statements that he is considering extending this program until the early summer of 2021 will definitely play into the hands of businesses and households, as it will remove some of the debt burden from them. The exact form of the program is expected to be announced on March 3, with comparable changes based on the emerging situation with Covid-19. The fact that the government is preparing to expand state support for jobs is a sign that ministers fear the consequences of the pandemic, which continues seriously threaten business. There are no talks about lifting restrictions yet, and this will happen only as the coronavirus vaccine spreads throughout the country and in all segments of the population. Let me remind you that mortality and the increase in daily cases have reached record levels this month, and the UK economy itself is on the verge of a double recession, while the Governor of the Bank of England Andrew Bailey is more optimistic in his forecasts. In his opinion, the UK economy is already learning to adapt to the restrictions to contain the coronavirus. According to the forecast of the bank’s economists, the economy suffered a partial lockdown, which began in November this year much better than in the first wave of the pandemic in early 2020. Bailey noted that due to the lack of data, it is too early to tell how the economy was doing in January 2021. However, recent reports suggest that the impact of quarantine measures and isolation has somewhat diminished from an economic point of view. Bailey also noted that during the February meeting a decision will be made on new monetary stimuli, but much will depend on how fast it spreads. Covid-19. The initial cursory assessment of the economy after Brexit, when the UK left the single market of the European Union, will also be important. Bailey also noted that the possibility of using negative interest rates has not even been discussed, since there is no real need for it. As for the technical picture of the GBPUSD pair, it continues to update new annual highs, and a breakout of the 1.3750 level will only give confidence to the buyers of the pound in the correctness of their solutions. If this happens, you can catch a trading instrument around 1.3800 and 1.3850. It will be possible to talk about increasing pressure on the pair only after the bears push the pound below the support at 1.3670. This is where the lower boundary of the new ascending channel formed on January 18 this year passes. A breakdown of this area will quickly drop the pound to the lows of 1.3625 and 1.3530.EUR Today’s monetary policy decision by the European Central Bank was not unexpected. According to the data, the ECB left interest rates unchanged, which fully coincided with the forecasts of economists. The ECB kept the refinancing rate at 0%, and the rate on deposits at -0.50%. The European regulator reiterated that it will continue to maintain a very loose monetary policy, and confirmed its past forecasts for the economy and interest rates. Regarding the asset repurchase program, the regulator also did not revise it and announced the continuation of bond buybacks in emergency conditions of a pandemic totaling 1 trillion 850 billion euros. According to this program, the bank will buy bonds worth 20 billion euros every month. If necessary, the governing board is always ready to adjust all its instruments. As for the numbers, which came out this morning, only the report on the sentiment in the French manufacturing sector, which improved in January this year, attracted attention. Manufacturing sentiment rose to 98 points from 94 in December, according to statistics bureau Insee. The Manufacturing Expectations Index jumped to 7, while the overall manufacturing outlook in January deteriorated slightly to -9 from -5 a month earlier. As for the technical picture of the EURUSD pair, it remained unchanged. The bulls have gone to great lengths to keep the market on their side. However, it will be possible to talk about the continuation of the bullish trend in risky assets with a confident breakdown of the resistance at 1.2175, which will open the way to the highs of 1.2230 and 1.2280. If the bears regain control over the level of 1.2130, we can expect a new wave of falling of the trading instrument to the minimum of 1.2090, and then to the area of ​​1.2055. Material provided by InstaForex – www.instaforex.com Source – InstaForex

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