GBP/USD: before the release of the Fed's minutes

21 February 2018, 12:39
TifiaFX
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In anticipation of the publication (at 19:00 GMT) of the minutes from the Fed meeting held on January 30-31, the dollar remains stable and trades with a slight increase. In December, the Fed for the third time in 2017 increased the rate, bringing it to the current level of 1.5%. Fed leaders voted unanimously for this rate hike and showed a tendency to further tighten monetary policy in the next two years. During the January meeting, the leaders of the Fed confirmed their intention to raise the interest rate three times in 2018 and twice in 2019.

Market participants expect that the first rate increase may occur already during the March meeting of the Fed (March 20 - 21). Moreover, many investors (21%, according to the latest data from the CME Group) believe that the Fed will raise the rate four times in 2018 amid a steady growth in the US economy, the labor market and inflation. And now, investors are hoping to catch new signals from the Fed regarding further plans in the matter of monetary policy.

As usual, the national currency grows when the interest rate rises. So far, the growth of the dollar is not observed, since many investors remain negative towards him because of deep negative fundamental factors. Many economists believe that the dollar is only at the beginning of the multi-year cycle of the next decline. But everything can change if the Fed will systematically tighten monetary policy, and the positive macro data will come from the USA.

There is still no clear idea of ​​how the macroeconomic situation in the US will change as the new tax and economic policies of the White House are implemented.

As for the pound, the positive macro statistics received during the current European session from the UK did not significantly affect its dynamics. Despite the fact that the unemployment rate unexpectedly increased in the fourth quarter of 2017 (by 0.1% to 4.4%), the overall employment rate has increased, and the number of unemployed has declined most strongly since the end of 2015. Wages also increased. Moreover, the growth of salaries in the UK has been the strongest since the end of 2016.

In January, inflation remained at 3.0%, which is 1 percentage point higher than the target level of the Bank of England. In November, the Bank of England raised its key interest rate for the first time in a decade to contain inflation. Recently, central bank officials signaled that the rate may need to be raised earlier than originally expected. This is a strong factor in favor of strengthening the pound. At the same time, the pound will remain vulnerable against the euro and the dollar against the backdrop of Brexit.

Among other important news for today regarding the pair GBP / USD, it is worth highlighting

the speech (at 14:15 GMT) of the Bank of England Chairman Mark Carney during the hearing in the British Parliament of the Bank of England's report on inflation.

And at 14:45 there will be a block of important macro statistics from the United States. Among the published data - PMI in the leading sectors of the US economy (in the services sector and in the manufacturing sector) for February (preliminary release). The growth of indicators is expected, which will give an additional bullish impulse to the dollar.

With respect to the pair GBP / USD, we can say that, in general, positive dynamics remains. However, GBP / USD is in the zone of strong resistance levels 1.4185 (EMA50 on the monthly chart), 1.4050 (EMA200 on the weekly chart), from which it is possible, if not a turn, then a deep enough rebound.

*)An advanced fundamental analysis is available on the Tifia Forex Broker website at tifia.com/analytics

 

 Support levels: 1.3890, 1.3835, 1.3800, 1.3700, 1.3630, 1.3550, 1.3420, 1.3370, 1.3210

Resistance levels: 1.3990, 1.4050, 1.4100, 1.4185, 1.4340, 1.4400, 1.4500, 1.4575

 


Trading Scenarios

Sell ​​on the market. Stop-Loss 1.4010. Take-Profit 1.3890, 1.3835, 1.3800, 1.3700, 1.3630, 1.3550, 1.3420, 1.3370

Buy Stop 1.4010. Stop-Loss 1.3910. Take-Profit 1.4050, 1.4100, 1.4185, 1.4340, 1.4400, 1.4500, 1.4575

*) For up-to-date and detailed analytics and news on the forex market visit Tifia Forex Broker website tifia.com

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