Forex News from InstaForex

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  1. #941
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    Forex News from InstaForex
    Employment reports do not meet the expectations of the Fed and the markets

    According to the reports, the total number of Americans who applied for unemployment benefits exceeded a three-month maximum. Experts believe that the latest wave of COVID-19 infections is to blame, which has disrupted only the revived business activity, signs of revival of which are showing job growth.

    Employment reports do not meet the expectations of the Fed and the markets.

    Despite increased labor demand, initial jobless claims rose 55,000 to a seasonally adjusted 286,000 for the week ended January 15. This is the maximum since mid-October, which was reported on Thursday by representatives of the Ministry of Labor. The overall increase was the largest since July last year.



    "Even with the usual buzz in the numbers, they seem to reflect the record increase in COVID-19 cases from Omicron," said Robert Frick, corporate economist at the Navy Federal Credit Union of Virginia.

    "Fortunately, Omicron is at its peak, and if past models persist, applications should decline rapidly in the next two to three weeks," he said.

    In the meantime, economists are disappointed, as the median forecast fluctuated at the figure of 220,000 applications for the last week.

    Unadjusted benefit applications declined last week. However, this decrease was less than expected (taking into account seasonal factors that the government uses to exclude seasonal fluctuations from the data).

    Applications increased by 6,075 in California. But they fell by 14,011 in New York. There were also big drops in Missouri and Texas.

    The United States reports an average of 732,245 new cases of omicron coronavirus infection per day, according to official government data. However, there are signs that in some regions, including hard-hit New York, the number of cases is beginning to decrease.

    Applications may begin to decline as the number of cases of infection decreases.

    And yet it may not just be a seasonal outbreak.

    Thus, conditions in the labor market are tightening. Employers are in desperate need of workers: 10.6 million vacancies were opened at the end of November.

    But what if some of these vacancies have unadjusted wages for inflation? It is known that wage growth always lags behind inflation. Taking into account the huge migration of employees noticed in December last year, it is possible that the most "delicious" vacancies were dismantled, leaving former employers with empty jobs. How competitive are these 10 million vacancies? This hidden factor does not allow us to estimate the actual capacity of the employment market.

    Currently, the unemployment rate is at a 22-month low of 3.9%, which is a sign that the labor market is at or close to maximum employment. The question remains, where do 10 million vacancies come from if the real sector is going through hard times due to supply disruptions and the rise in the cost of components?

    Recall that in December, the economy added 199,000 jobs, which is the lowest figure for the year. This shows that the economy has slowed down the recovery. At the same time, the last two years have "taken away" 2.2 million able-bodied residents from the United States. Given the weak reflation, it is not entirely clear why there is such a stir around the search for labor?

    The application data covers the period during which the government surveyed businesses for the non-agricultural component of wages in the employment report for January. At first glance, applications significantly exceed their level in mid-December. However, the actual conditions may differ from those described in the application.

    Along with this obvious discrepancy between the two indicators, experts note that the shortage of workers and disruptions caused by Omicron due to absenteeism, reduction of operations, or temporary closure of enterprises may lead to wage growth remaining moderate this month. If this happens, at the end of January, we will see a new surge in applications for unemployment benefits, which will offset the gains from the effect of the weakening of the coronavirus.

    The report on secondary applications showed that the number of people receiving benefits after the first week of assistance increased from 84,000 to 1.635 million in the week ending January 8. These so-called continuing applications remained below 2 million for the eighth week in a row. However, the growth of extended benefits is impressive.

    These figures suggest that the reports are lying: there are much fewer jobs that are competitive and ready to accept people today, otherwise, we would have seen an impressive increase in production and sales, which contradicts the data. My opinion remains the same: the government is wishful thinking to quickly introduce an upward regime of interest rates, putting a barrier to rampant inflation.

    In the meantime, the latest reports on applications will hit the indices, although they are still growing. The yield of 10-year benchmark bonds is also rising, and the spot dollar rose by 0.03%. The euro/dollar pair is falling, the indices are also likely to turn around during the American session.

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    European stock markets ended trading on Friday in the red



    Stock indices of the countries of the Asia-Pacific region closed in the red on Friday, a similar trend has developed in the US stock market. Analysts attribute the fall in world markets to the prospects for a more aggressive than expected increase in rates by the Federal Reserve System.

    Meanwhile, retail sales in the UK fell 3.7% in December from the previous month, showing the biggest drop since January, according to data from the National Statistics Office (ONS). Analysts on average had forecast a decline of just 0.6%. In annual terms, sales decreased by 0.9% instead of the expected growth of 3.4%.

    Despite the decline in December, retail sales this month were up 2.6% compared to pre-pandemic February 2020. For 2021 as a whole, sales jumped 5.1%, the fastest pace since 2004.

    The composite index of the largest enterprises in the Stoxx Europe 600 region fell by 1.8% to 474.44 points as a result of trading. At the same time, all sectoral sub-indices declined, the financial and technology sectors the most.

    Losses of the indicator for the entire past week amounted to 1.5% on fears of tightening the monetary policy of the world's central banks and increased tensions between Russia and the United States.

    The German DAX index fell by 1.9% during the day, the French CAC 40 - by 1.75%, the British FTSE 100 - by 1.2%. Spain's IBEX 35 shed 1.4% and Italy's FTSE MIB shed 1.9%.

    German Siemens Energy AG shares plunged 16.6% on Friday after Siemens Gamesa subsidiary Renewable Energy SA released preliminary financial results for the first quarter.

    The price of Siemens Gamesa fell 14%. The company posted an adjusted EBIT loss of €309m against a profit of €121m in the same period a year earlier, while its revenue fell to €1.8bn from €2.3bn. Siemens Gamesa also downgraded its forecasts for the main financial indicators for the 2022 financial year.

    The fall leader in the Stoxx Europe 600 index, in addition to Siemens and Siemens Gamesa, was the Danish wind turbine manufacturer Vestas Wind Systems A/S (-9%). Also, steel ThyssenKrupp AG (-7.2%) and e-commerce platform InPost S.A. (-8.6%).

    The energy sector went into the red zone following the fall in oil prices, including the value of Royal Dutch Shell Plc decreased by 1.7% and BP Plc - by 1.8%.

    TotalEnergies on Friday announced its decision to pull out of a natural gas project in Myanmar and stop doing business in the country, which suffered a military coup in February 2021. The company will not receive financial compensation, its share in the Yadana field and the MGTC gas pipeline will be distributed among project partners. Capitalization of TotalEnergies for the day fell by 2.1%.

    In addition, securities of the semiconductor industry, including ASML Holding (-1.7%) and AMS (-3.6%), as well as software developer SAP (-1.2%), fell in price.

    Meanwhile, the shares of the German developer of software for remote connection TeamViewer AG (+4.3%) and the Polish retailer Dino Polska (+3.6%) grew most significantly

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    EUR/USD: the euro suffers from uncertainty about the Fed's future steps, and the dollar wonders when the central bank will present it with a gift in the form of an interest rate hike



    Less than two weeks ago, the words of Federal Reserve Chairman Jerome Powell that the central bank's plans to raise interest rates would not lead to a slowdown in the growth of the national economy, allowed market participants to consider the issue of tightening monetary policy in the United States resolved.

    Fears that the Fed could throw the stock market under the bus to eradicate high inflation led to the strongest weekly drop in the S&P 500 index since the beginning of the pandemic in March 2020 (by 5.7%).

    The shares suffered due to investors' concern for the fate of the corporate sector, which will lose cheap money during the deterioration of macro statistics in the country.

    Thus, retail sales in the United States in December decreased by 1.9% compared to the previous month, although experts did not expect a change in the indicator.

    Last month, the volume of industrial production in the country decreased by 0.1% with an expected growth of 0.3%.

    The consumer confidence index from the University of Michigan in January sank to 68.8 points from 70.6 points recorded in December, which was the second lowest level in a decade.

    The number of initial applications of Americans for unemployment benefits for the week ending January 15 increased by 55,000, reaching 286,000, which is the highest since mid-October.

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    Most Asian stock markets are trading in the red



    The Federal Reserve may signal to markets that it is ready to start raising interest rates in March following its January meeting, which ends on Wednesday, analysts say. This will be the first rate hike since 2018.

    The easing of monetary policy was caused by the COVID-19 pandemic. But now the Fed may also say that it is considering other options for tightening monetary policy to combat rising inflation, CNBC notes.

    A growing number of Fed officials and Wall Street economists see the possibility of more than three hikes in the base interest rate by the US Central Bank this year against the backdrop of a significant rise in consumer prices. They explain these forecasts as signals that inflation in the US, which is at a maximum for almost 40 years, affects all segments of the economy, while the labor market is growing rapidly.

    The Japanese Nikkei fell by 0.4% by 8:36 GMT+2.

    Among the components of the index, the shares of Idemitsu Kosan Co. are the leaders of decline. Ltd. (-8.8%), Shionogi & Co. Ltd. (-5.9%) and Ricoh Co. Ltd. (-4.9%).

    Shares of the metallurgical company Japan Steel Works Ltd. lose 2.5%, shares of IT company Rakuten Group Inc. grow by 0.7%, investment SoftBank Group Corp. add 1.8%.

    The Hong Kong Hang Seng fell by 0.1% by 8:45 GMT+2, while the Shanghai Shanghai Composite rose by 0.3%.

    Shenzhou International Group Holdings Ltd (-7.4%), Wuxi Biologics (Cayman) Inc. are the decline leaders in Hang Seng. (-6.5%) and Li Ning Co. Ltd.(-3.08%).

    Shares of automaker Geely Automobile Holdings Ltd. are cheaper by 2.3%, technology company JD.com Inc. - grow by 1.4%.

    South Korean Kospi lost 0.15% by 8:45 GMT+2.

    Shares of automaker Kia Corp. (KS:000270) up 1.8%, shares of Hyundai Motor Co. decrease by 2.1%.

    The cost of chip and electronics manufacturer Samsung Electronics Co. is down 0.8%, its rival LG Corp. grows by 0.1%.

    Australian stock exchanges are closed due to the holiday (Australia Day).

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    US stock indices ended trading without a single dynamics



    The Dow Jones Industrial Average fell 129.64 points (0.38%) by the close of trading to 34,168.09 points.

    The Standard & Poor's 500 lost 6.52 points (0.15%) to 4349.93 points.

    The Nasdaq Composite increased 2.82 points (0.02%) to 13542.12.

    The Fed kept the interest rate on federal funds (federal funds rate) in the range from 0% to 0.25% per annum. The decision coincided with the forecasts of economists and market participants.

    The Federal Open Market Committee (FOMC) of the Fed aims to achieve maximum employment and inflation at 2% in the long term. To support this goal, the committee decided to maintain the target range for the federal funds rate at 0-0.25%.

    At the same time, since inflation is well above 2% per annum with a strong labor market situation, committee members expect that it will soon be appropriate to raise the target rate range. At the same time, the head of the Fed, Jerome Powell, during a press conference following the meeting, noted that FOMC members intend to raise interest rates already at the March meeting.

    The American Central Bank also announced that it plans to continue reducing the volume of the asset buyback program and intends to curtail it in March.

    Meanwhile, traders followed the ongoing reporting season of US companies.

    Boeing Co. shares lost 4.8% in price on the news that the company's revenue fell by 3.3% and turned out to be worse than the market forecast, which was waiting for its growth.

    Exchange operator Nasdaq Inc. in October-December increased profit by 16%, revenue - by 12%, and the latter figure and adjusted profit were higher than experts' expectations. Nasdaq shares fell 3.1%.

    Telecommunications and media company AT&T Inc. returned to profitability last quarter, with adjusted earnings and revenue above forecasts. Capitalization of AT&T, however, decreased by 8.4%.

    Freeport-McMoRan Inc. share price fell by 3%, although the producer of copper and gold in the last quarter of 2021 increased its net profit by 57%, revenue by 37%.

    Automatic Data Processing lost 9% despite the HR software and services provider posting better-than-expected earnings and revenue in the second quarter of fiscal 2022.

    Consumer goods manufacturer Kimberly-Clark Corp. in October-December of the year reduced net profit by a third, despite the growth in revenue, due to increased costs. The value of the company fell by 3.4%.

    Meanwhile, US new home sales jumped 11.9% in December from the previous month to 811,000 annualized, the country's Commerce Department said. According to the revised data, 725,000 houses were sold in November (an increase of 11.7% MoM), while previously the figure was 744,000 (a jump of 12.4%).

    Analysts, on average, expected a 1.8% increase in new home sales last month from the previously announced November level to 757,000.

    Stock quotes of large American construction companies Lennar Corp. and KB Home were down 4.5% and 4.8%, respectively.

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    US stocks closed lower, Dow Jones down 0.02%



    At the close on the New York Stock Exchange, the Dow Jones fell 0.02% to a one-month low, the S&P 500 index fell 0.54%, and the NASDAQ Composite index fell 1.40%. Dow Inc was the top performer among the components of the

    Dow Jones index today, up 2.96 points or 5.17% to close at 60.18. Chevron Corp rose 2.68 points or 2.02% to close at 135.37. Merck & Company Inc rose 1.44 points or 1.82% to close at 80.58.

    The losers were shares of Intel Corporation, which lost 3.64 points or 7.04% to end the session at 48.05. Boeing Co was up 2.33% or 4.52 points to close at 189.75 while American Express Company was down 1.95% or 3.42 points to close at 171. 90.

    Among the S&P 500 index components gainers today were ServiceNow Inc, which rose 9.14% to hit 528.69, Ball Corporation, which gained 8.57% to close at 93.99, and Seagate Technology PLC, which gained 7.65% to end the session at 103.68.

    The biggest losers were Teradyne Inc, which shed 22.41% to close at 111.24. Shares of Tesla Inc lost 11.55% and ended the session at 829.10. Quotes of Advanced Micro Devices Inc decreased in price by 7.33% to 102.60.

    The leading gainers among the components of the NASDAQ Composite in today's trading were National Security Group Inc, which rose 69.65% to 15.65, Sidus Space Inc, which gained 31.55% to close at 10.80. as well as shares of Galapagos NV ADR, which rose 22.47% to close the session at 65.30.

    The biggest losers were Epizyme Inc, which shed 44.21% to close at 1.060. Shares of TG Therapeutics Inc shed 40.65% to end the session at 8.25. Quotes of Cyngn Inc decreased in price by 36.47% to 1.62.

    On the New York Stock Exchange, the number of securities that fell in price (2349) exceeded the number of those that closed in positive territory (941), while quotes of 143 shares remained virtually unchanged. On the NASDAQ stock exchange, 3,122 companies fell in price, 838 rose, and 174 remained at the level of the previous close.

    Chevron Corp shares rose to an all-time high, up 2.02%, 2.68 points, to close at 135.37. Shares in National Security Group Inc surged to a 52-week high, up 69.65% or 6.43 points to close at 15.65. Epizyme Inc shares fell to all-time lows, down 44.21% or 0.840 to close at 1.060. TG Therapeutics Inc shares fell to a 52-week low, falling 40.65%, 5.65 points, to close at 8.25. Cyngn Inc shares tumbled to all-time lows, dropping 36.47% or 0.93 points to close at 1.62.

    The CBOE Volatility Index, which is based on S&P 500 options trading, fell 4.60% to 30.49.

    Gold futures for February delivery lost 1.81%, or 33.15, to $1,796.55 a troy ounce. In other commodities, WTI crude for March delivery fell 0.08%, or 0.07, to $87.28 a barrel. Brent oil futures for April delivery rose 0.24%, or 0.21, to $88.90 a barrel.

    Meanwhile, in the Forex market, EUR/USD fell 0.02% to hit 1.1141, while USD/JPY shed 0.01% to hit 115.32.

    Futures on the USD index rose 0.87% to 97.235.

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    US stock market closes higher, Dow Jones gains 1.17%



    At the close in the New York Stock Exchange, the Dow Jones was up 1.17%, the S&P 500 was up 1.89% and the NASDAQ Composite was up 3.41%.

    The leading gainer among the components of the Dow Jones index today was Boeing Co, which gained 9.67 points or 5.07% to close at 200.24. Salesforce.com Inc rose 10.50 points or 4.73% to close at 232.63. The Walt Disney Company rose 4.34 points or 3.13% to close at 142.97.

    The biggest losers were Walgreens Boots Alliance Inc, which shed 0.70 points or 1.39% to end the session at 49.76. Amgen Inc was up 0.87% or 2.00 points to close at 227.14, while Visa Inc Class A was down 0.80% or 1.83 points to close at 226. ,17.

    Leading gainers among the S&P 500 index components in today's trading were Enphase Energy Inc, which rose 13.41% to 140.47, SolarEdge Technologies Inc, which gained 12.33% to close at 238.22, and also shares of Netflix Inc, which rose 11.13% to end the session at 427.14.

    L3Harris Technologies Inc led the decline, shedding 4.29% to close at 209.29. Shares of Kellogg Company shed 3.46% to end the session at 63.00. Quotes of Citrix Systems Inc decreased in price by 3.42% to 101.94.

    Leading gainers among the components of the NASDAQ Composite in today's trading were Calithera Biosciences Inc, which rose 55.65% to hit 0.650, Inspira Technologies Oxy BHN Ltd, which gained 36.52% to close at 3.14, and also shares of Vaccinex Inc, which rose 33.63% to close the session at 1.510.

    The drop leaders were shares of Imperial Petroleum Inc, which lost 55.05% to close at 0.98. Shares of Appharvest Inc lost 12.06% to end the session at 2.99. Quotes of Vigil Neuroscience Inc decreased in price by 11.95% to 12.90.

    On the New York Stock Exchange, the number of securities that rose in price (2,680) exceeded the number of those that closed in the red (574), while quotes of 106 shares remained virtually unchanged. On the NASDAQ stock exchange, 3323 companies rose in price, 582 fell, and 154 remained at the level of the previous close.

    Imperial Petroleum Inc shares tumbled to historic lows, down 55.05% or 1.20 points to close at 0.98. Shares in Appharvest Inc plunged to all-time lows, shedding 12.06% or 0.41 points to close at 2.99.

    The CBOE Volatility Index, which is based on S&P 500 options trading, fell 10.23% to 24.83.

    Gold Futures for February delivery added 0.76%, or 13.60, to $1,798.50 a troy ounce. In other commodities, WTI crude for March delivery rose 1.49%, or 1.29, to $88.11 a barrel. Brent oil futures for April delivery rose 0.07%, or 0.06, to $89.28 a barrel.

    Meanwhile, in the Forex market, EUR/USD was down 0.00% to hit 1.1233, while USD/JPY was up 0.03% to hit 115.14.

    Futures on the USD index fell 0.65% to 96.632.

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    US dollar is torn between recession and attempts to rise



    This week has not been set for the US currency. It fell due to the probability of disappointing macro statistics and the short-term strengthening of the euro. However, it does not give up, trying to leave the price hole.

    On Tuesday, the US dollar collapsed from a 19-week high. It is declining for the second session in a row, unsuccessfully trying to stay above. There are several reasons for the decline – the expectation of the Fed's rate hike, increased cash flows at the end of January, due to which investors have to sell dollars and an increase in risk appetite. At the end of last month, the risk appetite in the markets increased significantly. The catalyst for this was the rebalancing of investors' portfolios and their move into protective assets.

    American macro statistics provided temporary support for the US dollar. Last month, the index of business activity in the industry of the country declined to 57.6% from the previous 58.7% and analysts' expected fall of 57.5%. Currently, markets are waiting for signals from the European regulator, as the US has already did an action, marking the course for tougher monetary policy.

    According to experts, the US dollar's decline was facilitated by market fears about a possible reduction in the gap between the ECB and the Fed. Some analysts suggest that the European regulator will raise rates before the American one. At the same time, the markets are not confident that the Fed will raise rates five times this year. It can be recalled that the US regulator has repeatedly had to change its plans. Nevertheless, the market is still counting on a five-fold increase in the Fed's rates, the first of which is expected in March. As for the ECB, it is still adhering to the ultra-soft monetary policy, refusing to raise rates this year.

    The current situation helped the EUR/USD pair to rise, while the US currency remained under pressure. The strengthening of the euro became a powerful driver of trading, which was facilitated by Inspiring reports on consumer prices in Germany. Experts admit a reversal in the direction of 1.1300-1.1350. According to currency strategists, the next target of the EUR/USD pair will be the level of 1.1300. The formation of the bullish pattern "Morning Star", fixed on the chart on Tuesday, contributed to this. On Wednesday morning, the EUR/USD pair was hovering around 1.1274, approaching the specified level.



    Currency strategists cite the flattening of the yield curve as among the reasons for the US dollar's current weakness. A flat curve is a sign of an impending recession, while an inverted curve indicates a recession in the economy. Economists estimate that the US yield curve is gradually flattening, while the yield spread between 2-year and 10-year bonds is narrowing (to a minimum since October 2020). This worries experts who see an analogy with December 2018, when the Fed completed its cycle of raising rates, increasing the rate to 2.5%. At this time, the regulator began to reduce the balance sheet, and it now aims to take similar actions. However, the result may not meet market expectations.

    According to analysts, the flattening yield curve indicates that the debt market is counting on a solution to supply chain problems. If the issue is resolved, the Fed will not need an aggressive series of rate hikes. However, the market is worried that the rate hike will not allow the Fed to contain price pressure. It is possible that the "hawkish" position of the US regulator, faced with a similar position to the European one, will strike a spark in their relationship. This week's positivity will be the strengthening of the euro against the US dollar, which market participants expect.

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    Eurozone inflation hits record fueling bets ECB could raise interest rates



    The euro may continue its rally. On Wednesday, the currency broke through 1.1300. Despite the dovish ECB, macroeconomic data indicate a possible shift towards a more aggressive stance. Record inflation may force the European regulator and Christine Lagarde to consider tightening. Consumer prices in the eurozone continue to increase rapidly, in line with analysts' expectations.

    The annual inflation rate in the eurozone edged higher to a fresh record high of 5.1% in January from 5% in December. The market had not expected such an outcome. Neither of Bloomberg's respondents had anticipated another inflation rike. On the contrary, investors had projected a 4.4% slowdown in the rate.

    The data came out before the ECB's Governing Council meeting. Therefore, a disagreement may arise over the pace of QE tapering among the council members. There has been speculation that another unexpected inflation hike will be a kind of test for the European regulator.

    The euro's reaction to the inflation report was brief. The currency is unlikely to rise solely on these data. However, if the ECB adopts a hawkish stance, the euro will show steady growth.

    Market participants expect the regulator to announce the first rate hike by the end of the year. Meanwhile, the ECB fiercely denies such a possibility. Let's see what the regulator says on Thursday.

    Anyway, activity in markets increased after the release of the inflation report and the euro's reaction to it. Analysts started to revise their forecasts for EUR/USD. Scotiabank assumes the quote will head towards 1.1400 and break above the mark.

    The euro has potential for growth despite the current corrective move. If buyers show willingness to extend the uptrend, the target levels will stand at 1.1369 (the high of January 20) and 1.1430 where the 100-day EMA and the 4-month resistance line intersect.

    Meanwhile, the long-term forecast is likely to remain bearish as long as the price trades below the key 200-day SMA.

    Read More: Forex Analysis & Reviews: 03.02.2022 - Eurozone inflation hits...

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    in ro ham eslah kon:
    Pound aims to reach new highs



    The pound gathered strength for the next breakthrough, which occurred after the results of the Bank of England's meeting on the rate was announced. Its nearest goals are to consolidate in the reached positions and conquer the next highs.

    On Thursday, the Bank of England discussed the current monetary policy. The key issue was to raise the interest rate. The markets expect five rate hikes from the regulator this year, the cumulative increase of which will be 125 bps. Following the announcement of the results of the meeting, the pound noticeably declined against the US dollar. On Thursday evening, it was trading at the level of 1.3577 and then made a short-term breakthrough to 1.3628. However, it lacked the strength to hold on to the gained positions. On Friday morning, the GBP/USD pair was near the round level of 1.3600, trying not to further fall.



    Experts consider the Bank of England one of the most "hawkish" among the world's regulators. The actions of the monetary authority confirm this definition. It can be recalled that the British regulator is expected to increase the interest rate from 0.25% per annum to 0.5% while maintaining the volume of asset repurchases for 895 billion pounds. Along with this, the Bank of England revised the forecast of the country's economic growth downward to 3.75% from the previous 5% calculated in November 2021. The Central Bank of England considers a reduction in aggregate demand as the reason for the slow growth rates of the national economy. At the same time, the regulator raised the forecast for UK inflation for this year to 5.75% from the previous 3.5%.

    The current situation had a vague effect on the pound's dynamics. On the one hand, the rate increase gave impulse to it, helping it to increase, but on the other hand, it keeps it in a state of uncertainty. This condition prevents the pound from reversing and it has to be content with short-term growth.

    In relation to the Euro currency, the British currency also showed growth. Analysts noted that it surged to a 2-year high against the euro amid the interest rate hike by the Bank of England. The regulator expectedly raised the key rate to 0.5%, and this is not the limit. According to Jane Foley, Head of Foreign Exchange at Rabobank, the Bank of England will raise rates again in May 2022.

    "Against the backdrop of falling household incomes due to rising energy and food prices, market expectations for a rate hike by the Bank of England are exaggerated. However, another rate hike is expected in May," J. Foley believes.

    The British regulator has increased the interest rate to curb rampant price pressure. According to the estimates of the Central Bank of England, the inflation rate in the country will soon exceed 7%. The off-the-scale indicators not only concern inflation. According to BoE's representatives, consumer price growth in April 2022 will reach its peak values over the past 30 years and will amount to 7.25%. Based on the preliminary forecasts, the UK inflation will remain above 5% in a year. However, the ministry believes that inflation will be below 2% in three years and will amount to 1.6%. At the same time, the British regulator believes that investors have put too many rate increases in prices this year.

    Because of this, the pound remains at risk but does not give up. It is slightly imbalanced against the US dollar due to a decline in global risk appetite and a drop in the stock market, but it strives to overcome price barriers, despite inflationary pressure and several negative economic factors.

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