Site map
العربية Български 中文 Čeština English Français Deutsch हिन्दी Bahasa Indonesia Italiano Bahasa Malay اردو Polski Português Română Русский Srpski Slovenský Español ไทย Nederlands Українська Vietnamese বাংলা Ўзбекча O'zbekcha Қазақша

InstaForex Client Area

  • Personal settings
  • Access to all InstaForex services
  • Detailed statistics and reports on trades
  • Full range of financial transactions
  • System of managing several accounts
  • Maximum data protection

InstaForex Partner Area

  • Full information on clients and commissions
  • Graphic statistics on accounts and clicks
  • Webmaster instruments
  • Ready-made web solutions and wide range of banners
  • High data protection level
  • Company's news, RSS feeds, and forex informers
Register account
Affiliate Program
cabinet icon

InstaForex – always at the forefront!Open a trading account and become a part of the InstaForex Loprais Team!

Success history of the team headed by Ales Loprais can become your success history! Trade confidently and head towards leadership like regular participant of Dakar Rally and winner of Silk Way Rally InstaForex Loprais Team does it!

Join in and win with InstaForex!

Instant account opening

Get a letter of instructions
toolbar icon

Trading Platform

For mobile devices

For trading via browser

Long-term review

Exchange Rates 29.01.2020 analysis

The first meeting of the Bank of England this year attracts much more attention than the January meeting of the Federal Reserve. This is not surprising. For all the time Mark Carney has been at the helm of BoE, the chances of the regulator cutting the interest rate have not been as high as they are now.

Recall that the Bank of England rate has remained unchanged at 0.75% since August 2018. Its last decline occurred in 2016.

For the first time since August, the business activity index in the UK services sector rose above 50, indicating a sector expansion. The composite PMI has peaked since September 2018. Recent data on employment and wage growth indicate a relatively healthy labor market in the country. At the same time, reports on GDP, industrial production, inflation and retail sales were disappointing.

Thus, the BoE has reason to lower the interest rate, and this circumstance pulls the GBP/USD pair to the lower boundary of the medium-term range of consolidation of $1.3000-1.3350.

Exchange Rates 29.01.2020 analysis

Since the political upheavals associated with Brexit have so far receded into the background, the pound is vibrantly responding to macro statistics across the United Kingdom. Even the roller coaster of the GBP/USD pair against the background of the release of the British indices of purchasing managers look quite understandable. When everyone buys, there is a great opportunity to take profits on long positions.

The pound is also sensitive to changes in the chances of easing BoE's monetary policy, which, prior to the publication of January business activity data, soared above 70%, then dropped to 52%, and then rose to 60%.

Whatever decision the CB makes at the upcoming meeting, the GBP/USD pair is unlikely to remain in place.

According to the consensus forecast of Bloomberg analysts, the Bank of England Monetary Policy Committee will vote six times against three to keep the interest rate at 0.75%. This circumstance and the fact that speculators are skeptical about the idea of weakening BoE's monetary policy (by the end of the week by January 21, bullish positions in the British currency on the derivatives market fell quite slightly) can play a trick on the pound.

If BoE lowers the interest rate by 25 basis points, then the GBP/USD pair can easily go down to 1.2900 amid large-scale pound sales by hedge funds and asset managers. In the meantime, they prefer to stand aside and not force things.

Keeping the rate at the current level may result in the growth of the pound to 1.3100–1.3140.

As for the long-term prospects, fans of the British currency say that even the BoE's easing of the monetary rate will not put an end to the bullish trend in GBP/USD. According to them, improving the political landscape in Great Britain will contribute to the influx of foreign capital into the country. The bears are betting on difficulties in trade negotiations between London and Brussels, which may lead to increased uncertainty and a drop in business activity in the UK.

Performed by Viktor Isakov,
Analytical expert
InstaForex Group © 2007-2020
Benefit from analysts’ recommendations right now
Top up trading account
Get a bonus from InstaForex

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.