Monetary policy of the Bank of England

Financial and commodity markets analytics

Market Watch review. 05.02.2021

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

  • Monetary policy of the Bank of England. 
  • Growth of oil prices. 
  • Labor market in the USA. 

On Thursday, the Bank of England announced the results of the vote on the main interest rate, as well as the volume of asset repurchases, which remained unchanged. Moreover, not a single member of the bank's Monetary Policy Committee voted to change the terms. Let me remind you that the possibility of easing the monetary policy of the British regulator was discussed earlier. Therefore, the absence of these changes brought back sterling buyers to the market, even despite the revision of the GDP forecast from 7.25% to 5% in 2021.

The reaction of traders to this release was quite fast and strong. An hour after the publication, the quotes of the GBP/USD pair strengthened by more than 110 points, breaking the technical resistance level of 1.3635, which for a long time served as a support function.

Shifting to the US trading session, first of all, I will note the growth of oil quotes, which is due to another decline in oil reserves against the background of a general increase in its deficit. Let me remind you that it is the introduction of quotas for oil production by OPEC+ members and directly by Saudi Arabia that supports black gold quotes. Also, the lack of obvious sell-offs in the US stock market contributes to a steady increase in prices.

I would also like to draw your attention to the published report on changes in the number of initial and repeated applications for unemployment benefits in the United States. The actual data turned out to be significantly better than the previous and predicted ones, which is positive for the economy and, as a result, for the US dollar. The number of initial applications for unemployment benefits was the lowest since November 2020.

Concluding today's review, I would like to note the forthcoming release of data on unemployment in the US and Canada, as well as a speech by the head of the Bank of England. At the same time, the key event of today may be the publication of data on unemployment and the number of jobs created in the US non-agricultural sector. Given the noticeable decrease in the number of initial and repeated applications for unemployment benefits, I do not exclude the appearance of a good report on the labor market, which is positive for the US dollar.

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


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