FX.co ★ GBP / USD: Bank of England in its style. Lowering the Fed forecast affects the US dollar

While traders continue to "eagerly buy" European currency in the expectation of its long and rapid growth, buyers of the pound continue to stay away from everything that happens, carefully studying the signals from the Bank of England.

Fed

Yesterday, the Federal Reserve System raised interest rates, which generally expected 99% of the market, but revised its forecasts for growth next year.

A repeated criticism of US President Donald Trump, aimed at raising interest rates, addressed to the head of the Fed, seems to have taken effect. Fed Chairman Jerome Powell said yesterday that most members of the Open Market Committee had lowered their forecasts for 2018, indicating a slightly lower rate of increase in interest rates next year than planned. Now the Fed leaders are expecting two rate hikes next year, not three.

The data, which came out today in the first half of the day on the balance of the current balance of payments in the eurozone, also supported the euro.

According to a report by the European Central Bank, the current account surplus of the eurozone balance of payments in October 2018 rose to 23 billion euros from 18 billion euros in September. For the 12 months to October, the cumulative surplus of the current account of the eurozone's balance of payments was 345 billion euros, which is about 3% of eurozone GDP. However, compared with the same period in 2017, when the balance amounted to 350 billion euros, a decrease was noted.

Bank of England

One of the most important events of the day was the decision of the Bank of England to keep its key rate unchanged.

According to the minutes of the Bank of England meeting, in December of this year, the decision to keep the key rate at the level of 0.75% was pleasant. The number of votes cast for keeping the key rate unchanged was 9 to 0.

The English regulator noted that global growth prospects are worsening, and the uncertainty around Brexit is increasing. This will in the future affect the cost of bank financing and the yield of corporate bonds.

Regarding inflation, Bank of England economists expects it to fall below the target of 2% in the coming months.

As for the further gradual increase in interest rates, it will occur only in the case of an orderly Brexit.

The data, released on retail sales in the UK, also supported the pound.

According to a report by the National Bureau of Statistics, retail sales in the UK increased by 1.4% in November compared with October, which will support economic growth in the future. The growth is mainly due to discounts that were given to the public in connection with "Black Friday", when mass sales are being held. Compared with November of last year, sales increased by 3.6%. Economists had expected sales to increase by 0.5% compared with October.