The Federal Reserve has given the markets an extremely unexpected surprise, going against all imaginable and unthinkable expectations. The continued rise in inflation raises a number of well-founded concerns, especially about consumer activity. Common sense suggests that in such a situation, the monetary authorities should at least hint at the possibility of raising interest rates, even in the long term. And technically, the Federal Reserve has done just that. That's just with one small correction. An increase in interest rates should not be expected earlier than 2023. Although the inflationary dynamics clearly hints at the need to tighten monetary policy at the end of this year. But everything else was completely in line with expectations, and the Federal Reserve blamed the current economic difficulties on the coronavirus pandemic. In general, it repeated everything that the European Central Bank did last week. But just one statement about the possible timing of an interest rate hike was enough to cause the market to panic.
Formally, the main event of today is the meeting of the Board of the Bank of England. However, nothing supernatural should happen. The Bank of England will not just leave things as they are, but, following the example of the European Central Bank and the Federal Reserve, will blame all economic problems on the coronavirus pandemic. About the very possibility of raising interest rates, even no one will stutter. Moreover, the UK has a much more pressing problem, in the form of the consequences of the entry into force of a trade agreement with the European Union. Too little time has passed since it was signed, and it is too early to draw any conclusions about the consequences for the British economy. So, the Bank of England will remain completely silent for some time on a number of extremely important issues.
For the pound, the content of the European Medicines Agency's report on the AstraZeneca vaccine is much more important. This is not strange, but apparently the pound will receive good support. Back on Tuesday, in its official statement, the Agency said that the benefits of the vaccine outweigh all possible negative consequences. The World Health Organization spoke in much the same spirit yesterday. So the content of the document published today will be approximately the same. And this removes the risk that the countries that have ordered the AstraZeneca vaccine will demand a refund and damages. It was these fears that led to a noticeable weakening of the pound a couple of days ago. And since these fears are unfounded, the weakening of the pound was unjustified. And this injustice will need to be corrected immediately. So the pound has a good growth potential.
The GBP/USD currency pair has returned to the boundaries of the psychological area of 1,3950/1,4000/1,4050 in the course of recent speculations, while maintaining the desire for subsequent upward development.
The market dynamics is showing signs of acceleration, which is confirmed by a number of technical indicators, as well as the coefficient of speculative operations.
If we proceed from the current location of the quote, it will be seen that market participants are following within the boundaries of the psychological area, which can lead to a local slowdown.
Looking at the trading chart in general terms, the daily period, it is clear that the quote, even considering the recent jump, is still in the correction structure from the peak of the medium-term trend.
In this situation, it is not necessary to exclude a possible slowdown relative to the boundaries of the psychological area 1,3950/1,4000/1,4050, since history has repeatedly seen a reduction in trading volumes in this range. The subsequent development of the price will depend on the fixing of the quote relative to the coordinates: 1.3935 - downward development and 1.4015 - upward development.
From the point of view of a comprehensive indicator analysis, it can be seen that due to the recent price jump, technical instruments unanimously signal a purchase.