Posts

All Eyes On The British Pound And The BoE Decision

The best performer on Wednesday was the DAX which rebounded towards 15200 while we have made a large catch with our long entry at 15020 that ended with a 100-points profit.

Today the focus turns to the British pound and the Bank of England’s monetary policy decision. Some investors expect the central bank to slow the pace of bond purchases by a small amount instead of ending the stimulus abruptly in November. Policy makers are also expected to upgrade forecasts for growth and inflation today.

The pound will rally if the BoE tapers more drastically than currently expected. However, a slowdown in the pace of purchases could probably not have the same impact as the tightening seen by the Bank of Canada last month but it will be important to know whether rate hike expectations are being brought forward and whether there is still a likelihood of a further total envelope or not as the U.K. economy rebounds sharply from pandemic lows. If the BoE disappoints the market’s hawkish expectations, the pound could fall below 1.38.

The Bank of England decision is scheduled for 11:00 UTC.

GBP/USD

The cable remained in a narrow trading range ahead of today’s risk event and we expect some larger movement around the BoE decision. Above 1.3915 we see a next resistance at 1.3950 which needs to be broken before shifting the focus to 1.40 again. A bullish breakout above 1.4010 could result in a strong bullish move towards 1.42. On the downside we will keep an eye on the support levels. A break below 1.38 could lead to a test of 1.3770, followed by a lower target at 1.37. Below 1.3660 the pound could extend its slide towards 1.3550.

The next risk event for the pound will be today’s parliamentary elections in Scotland. The election could have profound consequences for the U.K. since it will decide not just who runs Scotland, but whether the battle for another Scottish independence referendum by the end of 2024 is back on the table.

Scotland elections could thus prove a litmus test for the nation’s appetite for breaking away from the United Kingdom. There is potential for massive chaos across the U.K.’s economic landscape in the next years if a split happens. Some investment managers see a 10 percent devaluation of the pound amid financial chaos and recession. The market is currently not pricing in such scenario.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

Focus On BoE And NFP Report

The U.S. dollar ended the last week higher against the euro and British pound and while the dollar’s recent strength appeared to be month-end rebalancing flows, traders wonder whether the dollar could extend its gains this week. Greenback bulls could hope for further bullish potential as long as there is a rise in U.S. Treasury yields but we bear in mind that rising near-term inflation expectations could outpace gains in U.S. Treasury yields while a dovish Federal Reserve could limit gains in the dollar.

On Friday we will have April’s non-farm payrolls report scheduled for release and almost one million jobs are anticipated to be added. The unemployment rate is also expected to decline to 5.7 percent from 6 percent in the previous month. The focus will also be on average hourly earnings for further insight into inflationary pressures.

GBP/USD

It could be a volatile week for the British pound. The Bank of England is due for its monetary policy announcement on Thursday and a QE taper could be in the cards. On the same day Scotland holds parliamentary elections which could bring back expectations of another independence referendum. Sterling could come under pressure ahead of the election as a potential referendum remains a risk for the currency.

As for Thursday’s other risk event, the Bank of England is expected to upgrade its economic projections with a stronger Q2 GDP forecast and there is a chance that the BoE will announce a slight tapering of asset purchases.

Technically, chances are slightly in favor of the bears right now with the pair eyeing the 1.38-support. If the cable falls below 1.3770, we could see a test of the lower support around 1.37 and possibly even a fall towards 1.36. However, given the possibility of a BoE taper on Thursday, losses might be limited to the support zones.

EUR/USD

The euro gave up some of its recent gains and dipped towards its crucial support at 1.20. We expect a lower support area to be at around 1.1950 from where more buyers could swoop in. A current resistance is seen at 1.2130. If the euro falls below 1.1940, bearish momentum may accelerate towards 1.1850 and 1.18.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

Fed Holds Dovish Line, Focus Shifts To BoE

The Federal Reserve held its dovish line and continued to project near-zero interest rates at least through 2023 while the central bank upgraded its forecasts for economic growth and the labor market. The dot plot showed that seven of 18 Fed officials predicted higher rates by the end of 2023 compared with five of 17 at the December meeting which was a slightly larger group of ‘hawkish dots’.

As for the withdrawal of the ultra-easy monetary policy, Fed Chair Jerome Powell said in a virtual press conference that the time to talk about reducing the Fed’s asset purchases was “not yet”.

While prospects of stronger growth have ignited some concern about higher inflation among investors the Fed expects that a bump in inflation this year will be short-lived.

In a nutshell, the market did not get such a hawkish outcome leading to a shift in the current risk sentiment. Instead, the Fed’s projected policy path and its upgrade of the economic outlook provide a positive backdrop for risk assets, which is why the anti-risk dollar weakened.

Today we will have the Bank of England rate decision at 12:00 UTC. The BoE is expected to leave monetary policy unchanged but volatility could pick up around the time of the decision.

GBP/USD: The technical picture has not materially changed. We will pay attention to price breakouts either above 1.4020 or below 1.3850 and further 1.3780.

DAX: The index hit our bullish target of 14720. If there is no break above 14760, the DAX could be due to a correction now. A higher support is seen at around 14500.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

GBP/USD: Will The Pound Rise Or Fall?

Today the focus turns to the Bank of England and its monetary policy decision. While no changes are expected the BoE is preparing to take a significant step into the debate on whether negative interest rates should be used to stimulate the U.K. economy. While negative interest rates are used to spur an economic recovery, the mere possibility of such a step should be negative for the respective currency. Economists expect the central bank to embrace negative rates as a tool but stop short of implementing them for now. According to a survey, most economists expect the key rate to remain at or above the current 0.1 percent through the middle of 2023 but BoE policy makers may indicate that further rate cuts are feasible.

In a nutshell, if Governor Andrew Bailey downplays the need for negative rates the pound will rise. If, however, Bailey indicates that the U.K. needs more help from the BoE, sparking speculation about negative rates the pound will fall.

The BoE rate decision is scheduled for 12:00 UTC.

Let’s take a brief look at the technical picture in the GBP/USD:

We see the pound testing the lower bound of its recent sideways trading range. A break below 1.36 could invigorate fresh bearish momentum but it will depend on the BoE whether a downside break remains sustained. In case of dovish commentary, a next lower target will be at 1.3520. For a bullish breakout, traders may pay attention to prices above 1.3670 that motivate sterling bulls for another test of 1.3750.

We wish you good trades!

Daily Forex Signals:

If you are keen to know where we put Take-Profit and Stop-Loss, if we trade on a specific day or not and how we manage open positions, subscribe to our signals

 

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

Follow us on social media:

Facebook

Twitter

Instagram

 

GBP/USD: Preparing For Potential Short Squeeze Scenario

Dear Traders,

After the absence of a major driver or catalyst in the markets, today is loaded with market-worthy data and thus, traders are bracing for higher volatility in most major currency pairs. Top event risk will be the Bank of England rate decision with the BoE’s Quarterly Inflation Report. While the BoE is unlikely to raise interest rates at this meeting, it is the inflation report and the press conference with BoE Governor Carney that garner most attention.

The Bank of England will announce its rate decision alongside the release of the central bank’s inflation report at 11:00 UTC. The press conference will follow 30 minutes later.

Following the complete U-turn in rate hike expectations out of the BoE, the central bank has little choice but to signal a rate hike in August to maintain the bank’s credibility. The risk is therefore tilted to the upside with a potential short squeeze scenario in the GBP/USD. If the BoE, however, disappoint in terms of rate hike speculation deviating from their hawkish bias, the pound will further fall.

Another, no less important, report will be the April Consumer Inflation Report (CPI) from the U.S., which is due shortly after the BoE’s decision at 12:30 UTC. The Federal Reserve debate over a fourth rate hike in 2018 is still ongoing, which is why inflation figures could affect current rate hike speculation. Thus, a surprise in CPI data could have a major impact on the dollar, paving the way for some profit-taking or maybe an extension of the dollar rally.

Let’s take a look at the technical picture:

GBP/USD

The cable traded consolidated between roughly 1.36 and 1.35. The short-term bias is slightly bullish, with the focus now being on an uptrend channel between 1.3615 and 1.3515.  A break above 1.3810 could open the door for accelerated bullish momentum towards 1.40. On the bottom side, the 1.35-support remains a crucial price barrier. If the pound drops below 1.3480 we may see a drift towards 1.3330.

EUR/USD: The euro still trades around the falling trendline of its recent downtrend channel. As mentioned in yesterday’s analysis, the 1.19-barrier could prove an important hurdle for euro bulls now. A break above 1.1910 may encourage bulls for a test of 1.1950. Today’s price action will, however, hinge on the appetite for USD, which is why we focus on U.S. CPI data.

Additional daily and long-term entries are available for subscribers.

View our daily signal alerts https://www.maimar.co/category/daily-signals/

Subscribe to our daily signal service https://www.maimar.co/signals/

We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2018 Maimar-FX.

www.maimar.co

 

 

 

 

British Pound Continues Decline On Carney Comments

Dear Traders,

The pound sterling continued its decline on Thursday with the cable dropping below 1.4145 and easily breaking through the 1.4090-support. Whether the pound’s sharp trend reversal will be sustained within the near-term remains to be seen but short traders in the GBP/USD should be rather cautious, at least for now.

Another reason for accelerated bearish momentum in the cable was an interview with Bank of England Governor Mark Carney who downplayed expectations of a rate hike at the BoE’s next meeting in May. He said that one rate hike is likely in 2018 but there are other meetings over the course of this year. However, if the BoE chooses to raise rates next month, despite recent data disappointments, sterling bulls may take over control ahead of the monetary policy decision on May 10.

GBP/USD: A crucial support is now seen at 1.4010/1.40 but with no important economic reports or fundamental events scheduled for release today it is unlikely that the pound is vulnerable to a downside break of that important barrier. A current resistance, on the other hand, is seen between 1.4150-1.4180.

The euro’s second attempt to break above 1.24 ended in failure, which is why the risk remains tilted to the downside. As mentioned in previous analysis, short traders in the EUR/USD should keep tabs on a break of the 1.23-barrier. Lower targets could be at 1.2265 and 1.2230. Euro bulls, on the other hand, should wait for an upside break above 1.2430.

We wish you good trades and a beautiful weekend.

Daily Forex Signals:

Additional daily and long-term entries are available for subscribers.

View our daily signal alerts https://www.maimar.co/category/daily-signals/

Subscribe to our daily signal service https://www.maimar.co/signals/

We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2018 Maimar-FX.

www.maimar.co