Global changes in financial markets

Financial and commodity markets analytics

Market Watch review. 12.02.2021

In today's release, we’ll cover the following topics:

  • Britain vaccinated nearly 20% of the population.
  • ECB may put pressure on EUR.
  • Bank of America revised the forecast for EUR/USD.
  • The oil market is still in the green zone.

This week will be remembered for the significant growth of the GBP/USD currency pair and, as a result, the update of the highs since April 2018. This is due not only to the weakening of the US dollar, but also to the faster pace of vaccination in Britain. The Kingdom has already vaccinated almost 20% of its own population, while in the United States this figure is lower than 13%.

Given the relatively high rate of vaccination, there is a high probability of a significant improvement in the economic situation in Britain, which is positive for the stock market and the economy as a whole. As a result, I do not rule out further strengthening of the pound sterling in pairs with most currencies, especially in pairs with risky currencies and currencies of developing countries.

I will also draw attention to the ECB, or rather to the regulator's readiness to restrain the further growth of the EUR, since such a trend is extremely unprofitable for the economy of the currency block. With all this in mind, it is important to keep a close eye on all comments from the ECB. It is no secret that verbal interventions are one of the most used tools of the European regulator in the fight against the high exchange rate of the national currency.

In favor of the weakening of the EUR/USD currency pair, the new forecast of Bank of America analysts indicates that over the next three months, this currency pair may return to 1.1800, against the background of the general strengthening of the USD. It is noteworthy that, in their opinion, the strengthening of the US dollar will be due to the overall recovery of the US economy, which will be achieved through further easing of the monetary policy of the Federal Reserve.

The recovery of the US economy will contribute to the growth of oil prices, as the US remains one of the largest consumers of this raw material. But we should not exclude the risk of a corrective decline in this market. Let me remind you that despite the unexpectedly strong decrease in oil reserves, the activity of buyers remained very weak, thereby increasing the risk of a corrective decline in the short term.

Closely monitor the news background and be prepared for all the surprises of the market.