GBP got support after BoE's report

GBP got support after BoE's report

2020-09-22 • Updated

Bank of England Governor Andrew Bailey delivered a speech today. Let’s discuss what it means for a trader.

The Bank of England cautioned that rising new virus cases in the UK may jeopardize the economic outlook, therefore, the bank needs to take hard actions to support the British economic activity further. Indeed, it seems that the Covid-19 has engulfed the United Kingdom: new infections are climbing by at nearly 6 000 a day. Therefore, the government may impose the second national lockdown.

Besides, coronavirus is not the only problem, which the UK faces. Brexit is also a significant issue, which has to be solved. Looking back at the latest Brexit talks, the EU and the UK are still far away from reaching an agreement. However, recent upbeat comments of European Commission President Ursula von der Leyen have curbed down fears over no-deal Brexit.

The central bank pledged to take hard actions to support the economy further. Many investors thought that last week the central bank hinted at the negative interest rates during its monetary policy statement. However, today the BoE’s governor said that investors took it wrong. According to him, negative rates are just part of the central banks’ toolbox, and the outcomes of implying them in different countries have been mixed. Since there are no negative rates on the horizon, which were initially expected by investors, the GBP has got support. The market was too rash to sell the GBP at the beginning and it’s trying to correct this mistake by buying it. 

In addition, on Wednesday Manufacturing and Services PMI reports will be out at 11:30 MT time! If the numbers come out better than the forecasts, the GBP will rise. In the opposite scenario, if they come out worse – the GBP will fall.

Technical tips

Immediately after the report the British pound has dropped briefly, but then started climbing up. If it jumps above the high of September 14 of 1.2875, the way to yesterday’s high of 1.2960 will be open. On the flip side, the move below the support of 1.2780 will drive the GBP/USD lower to the 100- and 200-day moving averages at 1.2730. 

GBPUSDH4.png

GBPUSDDaily.png

TRADE NOW

Similar

Oil: Russia-Ukraine Crisis Could Boost Oil Prices
Oil: Russia-Ukraine Crisis Could Boost Oil Prices

Crude oil futures surged on Monday due to disruptions in Russian refining capacity caused by Ukrainian drone strikes and Moscow's decision to cut output to comply with OPEC+ targets. The West Texas Intermediate (WTI) contract for May settled at $81.95 a barrel, up $1.32, while the Brent contract for May settled at $86.57 a barrel, also up $1.32. Russia instructed...

WTI and Brent React To a Key Pivot
WTI and Brent React To a Key Pivot

Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...

Latest news

WTT: Currency Pairs To Trade In April
WTT: Currency Pairs To Trade In April

Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera