Fed kept interest rates unchanged

The Fed kept the interest rate unchanged yesterday, but signaled that the inflation target was reached. Thus, the reserve, though disappointing investors expected an increase in interest rates at this meeting, opened its way to a June increase in interest rates.
The dollar initially declined, but subsequently recovered its losses. The euro returned at trading levels below 1.2000, with the pound continuing with its exceptionally strong impairment. Early this morning, a pound is exchanged for 1.3595 dollars.
The renewal of the Fed's inflation target is a major step after nearly six years in which consumer price growth in the world's largest economy is below the target of 2%.
The Fed also commented on the weak recent data on the labor market, saying labor market activity was slowing down, but it has performed well over the past few months.
In any case, at the next meeting on June 12-13, the Fed is expected to raise interest rates by 25 basis points after not doing so yesterday. Or, the market has bet almost 100%, that we will see a rise next month, unless something really dramatic happens.

The pound UK collapsed after GDP and retail sales

The pound lost 0.5% of its value after retail sales data in the country fell more than expected. This reduced the chances of an increase in interest rates at the next meeting, as was the expectation of the majority of market participants.
Retail sales in the country declined by 0.8% on a monthly basis in September, which was far worse than the average expectations for a 0.1% decline.
The growth of the British economy slowed to 1.5% yoy, in the third quarter, which was the weakest performance since October 2013.
According to Tuan Lan Nguyen, a currency strategist at Commerzbank AG, the data was quite disappointing and sent pounds down strongly against other major currencies. The expert doubts that with such data, the UK central bank will keep its promise of raising interest rates at its next meeting. However, he remains behind Commerzbank's medium-term forecast for an increase in interest rates.
The pound fell by 0.5% to 1.3135 against the dollar. With the same percentage, the pounds also fell against the euro to 89.69 pence per euro. Interest rates on 10-year British bonds fell four basis points to 1.28%.

Inflation in the UK highest in five years

Inflation in the UK rose to its highest level in five years in September, driven by accelerated food and transport prices.
The inflation rate rose to 3% in September on an annual basis, or the highest since April 2012, against 2.9% a month earlier, according to national statistics.
Data increases expectations for a raise in interest rates by the British Central Bank, perhaps next month.
The rise in the price of oil and petroleum products may mean that we will see further inflation in the future, according to market observers.
Now, inflation is a full percentage point above the target of the Bank's inflation rate of 2%.

Forex forecast for GBP/USD for April 17 - 21, 2017

According to poll amongst forex analysts and looking at techical picture, the forecast for EUR/USD for the next week looks as follows:
A rebound was expected for the GBP/USD. The basis for such a forecast was a zone of strong medium-term support, near which there was the pair. The goal was the height of 1.2500, which the pair reached in the first half of the week, after which it took a breather for almost a day. And then, having gathered with strength, GBP/USD rose another 75 points higher, reaching a height of 1.2575 on Thursday.
In the medium term, almost 80% of experts expect the pair GBP/USD to fall (support levels are located at 1.2420, 1.2360 and 1.2110). As for the near future, most analysts (60%), supported by both oscillators and trend indicators, are inclined to the fact that the upward impulse has not yet exhausted, and the pair will reach at least the height of 1.2615. The next resistance is at the level of 1.2705.

The pound went up against the backdrop of rising activity in the services sector of Great Britain

On Wednesday, the pound rate rose to a maximum for the session after the report data recorded in March the maximum growth in the service sector of the UK for the three months of 2017.
At 08:50 GMT, the pair EUR/USD increased by 0.27% to 1.2473 from the previous value of 1.2435.
Markit reported that the index of business activity in the service sector (PMI) of Great Britain increased last month to 55.0 compared to 53.3 in February. This is the maximum after December 2016.
Economists predicted that the value of this index would be 53.5.
The report says that the rate of price increase has become the maximum for eight and a half years, which indicates a possible increase in inflation this year above 3%, as many economists predict.
The report also indicates that the growth rate of new jobs in the services sector has become minimal over the past seven months.
Together with data from similar studies on the manufacturing and construction sectors that were published this week, the latest report indicated the likelihood of a slowdown in economic growth as the consequences of the UK's withdrawal from the EU.

GBP/USD may continue to decline

Sterling in tandem with the US dollar keeps negatively. The price chart has tested the support level in the area of ​​$ 1.2414. It is known that the index of retail sales came out worse than forecast, and thus disappointed the market participants.
It also shows that the price schedule is kept above the level of support and hints at the closing of short positions. If this trend will continue, it is still possible to prevent the purchase as part of speculative trading.
It is important to note that in the middle of next week's FOMC will held publication of the report. If the US dollar against the backdrop of this event will be strengthened, the sterling may continue the downward trend.

The dollar rose to a new wave of optimism

The dollar rose against other major currencies on Friday, recovering from the fall of the previous session to a minimum for the week. Strengthening of course is due to the wave of optimism about the economic situation in the US and more likely interest rate increase in March.
The dollar retains support after a report on Tuesday of Janet Yellen before the US Senate Banking Committee, in which she pointed out that the US central bank will raise the interest rate on one of the following of its meetings.
Yellen said that waiting too long before raising interest rates would be unreasonable under the condition of economic growth and increasing inflation.
In addition, the strengthening of the dollar was due to the positive US statistics on the number of initial applications for unemployment benefits and the number of construction permits.
EUR/USD slipped by 0.22% to 1.0650, down from 1.0682 week high.
The pair GBP/USD fell by 0.52% to 1.2425 after a report in the National Statistical Service of the UK (ONS) said that in January, the volume of retail sales decreased by 0.3% compared with growth forecast for 0,9%.
USD/JPY dipped by 0.43% to 112.75, and USD/CHF rate rose by 0.13% to 0.9984.

The dollar lost positions

The dollar has reduced its growth against other major currencies on Friday after the publication of mixed data on US employment.
According to the report of the US Department of Labor the number of employees outside the agricultural sector in January increased by 227 thousand compared with the forecast of 175 thousand. In December, the revised number of people employed outside the agricultural sector amounted to 157 thousand (initial value - 156 thousand).
However, the same report showed that the US unemployment rate in January rose to 4.8% after the value of 4.7% in December. Analysts did not expected an increase in the unemployment rate in January.
The average hourly wage in the United States increased by 0.1% instead of the expected increase of 0.3%.
In recent weeks, the dollar remained under pressure against the background of the protectionist policy of US President Donald Trump and the ban on the entry of immigrants, which led to the general instability in global markets.
EUR/USD has remained stable closing the week at 1.0783, rebounding from a session low 1.0714.
GBP/USD ended lower by 0.30% to 1.2478.

The British pound rose to a 7-week high

The British pound rose to a 7-week high against the US dollar on news that British economic growth rates have exceeded forecasts in the fourth quarter.
GBP/USD pair peaked at 1.2673, which was the highest value since December 14, rising to 1.2634.
According to the National Statistical Service of the United Kingdom the gross domestic product grew in the fourth quarter by 0.6%, which exceeded the forecast value (0.5%) and repeated the values from the third quarter.
Hopes for certainty about the Brexit also contributed to the growth of the pound. The UK Government has stated that in the purpose of the approval by the Parliament, it will publish on Thursday a preliminary version of the decision on application of Article 50 of the Lisbon Treaty (formally run out of the EU exit procedure).

Pound rises after the speech of Theresa May

The pound rose significantly on Tuesday, reaching a maximum increase for one day since the beginning of 2009. This happened after the speech of Theresa May about the UK's withraw from the EU and the depreciation of the dollar against the backdrop of investors assess caused by the statements of the president-elect Donald Trump.
The pair GBP/USD rose by 2.66% to 1.2369, pulling back from Monday's low at 1.1985, which was the lowest value after the October crash.
This was the highest rise of the pound from January 2009.
During a speech in London May confirmed that Britain will leave the European single market after Brexit, but will try to keep the maximum access to the market due to new trade agreements.
She also announced that the final plan for Brexit will be voted in both houses of parliament.
Sterling rose sharply against the euro: EUR/GBP pair fell by 1.91% to 0.8633, before recovering after a 10-week high at 0.8851 reached on Monday.
Earlier, the British currency was supported after the publication of data on the highest inflation in the past month in the UK from mid-2014.
National Statistical Service of the United Kingdom reported that annual inflation accelerated to 1.6% in December compared with 1.2% in November. This is higher than the forecast of 1.4%.

British economy retains upward momentum (Part 2)

Inflationary pressure is strong in the industrial sector, where manufacturers are suffering from rising raw material costs, according to BCC price pressures is now the highest since the second quarter of 1997 onwards.

According to the survey, inflation has emerged as the biggest cause of concern for many companies. Companies from both industrial and the services sectors are under pressure mainly by rising raw material costs, which increases opportunity for profit and could weaken further investment.

Firms in the country have become slightly more optimistic about their prospects compared to the previous quarter, although their confidence in turnover and profits remained relatively low compared with levels in the last three years.

The latest quarterly survey by the British Chamber of Commerce covers more than 7,200 companies in the country and was conducted between November 7 and November 28, 2016.

British economy retains upward momentum (Part 1)

The British economy has maintained its upward momentum in the last months of 2016, but at the same time, inflationary pressure has increased with the robust pace of almost 20 years. This shows a survey of British Chamber of Commerce (BCC), released today and cited by Reuters.
British Chamber of Commerce said that sales and hiring improved slightly in the fourth quarter, which is another signal that Britain is likely outstripped growth in most of the developed economics past year. The latest quarterly survey, however, also indicates the presence of complications arising from the votes of the British referendum last June when Britons voted to leave the European Union.
According to BCC, a record number of manufacturers expecting price rises over the next three months. Most companies in the service plan to raise prices, and their number is the highest since the beginning of 2011 onwards.

Although British business reported a slight improvement in export sales in the fourth quarter, the Chamber of Commerce notes that there is still very little evidence that the weakness of the pound has provoked a boom in demand for British goods abroad.

The euro rose sharply against the dollar, catching traders by surprise

During the last for the year Asian trading the euro jumped dramatically against the US dollar, which caught traders by surprise, writes MarketWatch.
The cost of the euro flew in a few minutes from a level of $ 1.0490 to $ 1.0700, a maximum of 2 weeks. However, the rate quickly dropped to $1.0517 from $1.0490 at the close of trading prior to the closing of the trading year.
In tandem with the yen the dollar rose to 116.986 yen compared with 116.54 yen at the close on Thursday
The Pound Sterling, Australian and New Zealand dollars also rose to US currency.
The cost of the pound rose to $ 1.2346 from $1.2261 day earlier.
WSJ Dollar Index, which tracks the dynamics of the dollar against 16 major currencies, fell during the trading by 0,5%. The indicator, however, closed the year with increase by more than 3%.

Rabobank sees risk of returning of GBP/USD to 1.24 USD

The recent growth of the pound may be explained by the liquidation by speculators of accumulated large short positions and with it no new positive news from the political front in the UK, as the further strengthening of the pound seems unlikely, analysts say.

Despite the fact that currently the market is waiting for the Supreme Court of the country to take an unfavorable decision, this factor has already been calculated in the prices. In addition, it is unclear what position will take Britain into negotiations with the EU, analysts say.

They see a risk of returning of GBP/USD to 1.24 dollars over the next three months and believe that far until you have realistic prospects of keeping the access of the country to the EU single market, the growth of the pair to 1.30 dollars seems unlikely.

BoE bonfired the pound up

The decision of the UK Supreme Court that the government can not take responsibility for launching the procedures for Brexit without the approval of the Parliament as well as the changed course of policy of the Bank of England allowed "bulls" on the GBP/USD to withdraw from the prolonged consolidation. The participants of Forex market are talking about soft Brexit, as well as the possibility of transferring it from March 2017 to a later date. This has had a serious support to the sterling.
The results of the June referendum, the emphasis on the BoE monetary expansion and the threat of an economic slowdown under the influence of Brexit weights hung on the feet of sterling. By late autumn, it becomes clear that the euphoria of the "bears" on the GBP/USD over policy is comparable with similar feelings of "bulls" on the S&P500 due to the potential victory of Hillary Clinton in the presidential election in the United States. The change in the balance of power has turned back in the polls for US stocks, as all we've seen. It is time for pound sellers also to moderate their appetites.
However, much more interesting is the fact that Mark Carney and his colleagues believed that the 6% devaluation of the pound in October will lead to acceleration of inflation of 0.7% in 2017. The forecast for CPI was increased to 2.7% for the period 2017-2018. At the same time the central bank has emphasized the change of repo rate in either direction, depending on the economic outlook. Thus, if inflation is expected to grow faster (and in the opinion of a number of banks and investment companies, it is able to rise to 3.5-4% in the next year), the BoE will be forced to tighten monetary policy, which is a serious "bullish" driver for the pound.

Canadian Carney decided to stay at the head of the Bank of England

The head of the Bank of England Governor Mark Carney said on Monday that he would remain in charge until July 2019, a year longer than planned, to ensure a smooth transition of the country from the EU, although still goes before the end of the procedure.
British pound, which collapsed by about 20 percent after the referendum on UK withdrawal from the EU because of concerns about the economic prospects for the UK, on ​​Monday rose to a daily high - $1,2240 on the news about the Carney's decision to stay as head of the regulator.
Canadian citizen Carney came under a barrage of criticism from politicians who favored a divorce with the European Union, since sounded the alarm, warning of the risks for the economy. He has the right to remain as a head of the British regulator until 2021, but decided to call it earlier.
"I am honored to extend my term in office for an additional year until the end of June 2019" - he wrote to Finance Minister Philip Hammond. The letter was published by the regulator.
"This should help to ensure an orderly transition of the United Kingdom to a new relationships with Europe."
The Government welcomed the decision of the 51-year-old financier.
Carney is the first foreigner in the 322-year history of the British central bank. The father of four students explained his desire to retire as early as 2018 by personal rather than political reasons.
However, the pressure on Carney was echoing similar pressure under which the regulators were in different countries of the West. US presidential candidate Donald Trump suspect the Fed keeping interest rates low because of the political pressures from the White House. The German Chancellor Angela Merkel called reasonable citizens' questions to the European Central Bank over the record low interest rates.

The Bank of England has called the fall of the pound "significant" will take into account in policy

The head of the British central bank Governor Mark Carney said that the fall in the value of sterling has appeared "quite significant" and the responsible for interest rate policy officials will consider it.
Speaking on Tuesday before lawmakers, Carney reiterated that the Bank of England is not aimed at a particular level of the pound, but is not indifferent to the exchange rate of the national currency.
Carney believes that the recent weakening of the pound after the annual conference of the ruling Conservative Party in October was not due to a change of opinion about the likely actions of the Bank of England's interest rate.
In early October, the pound fell to a minimum of 30 years.
Investors felt that the new British prime minister Theresa May will choose a hard-line approach to the forthcoming negotiations with the European Union about the Brexit, and this can greatly complicate access to European markets of London. May promises to begin formal negotiations on Brexit by March next year.
According to Carney, the pound starts to really vary, as time frame for lauching the 50th article is clarified, the pound is also sensitive from market perception - what will be the potential relationship between the United Kingdom and Europe.

Is GBP/USD going to gain a foothold above 1.2295?

The pair GBP/USD has maintained a positive attitude on Wednesday. The British pound spent a day in a sideways channel. Partially recovered, the pair consolidated between 1.2250 and 1.2350 levels, moving up and down between them. Despite the recent growth, the general background of the pair is negative.
On Thursday in the UK comes only a report on retail sales in the country. On the motion of the trading instrument may affect the results of the debate for the US presidency, which took place early in the morning on Thursday and the release of US labor market, which will be released later in the US session.
Strengthening of the dollar as a result of the debate and in the case of a positive report on the labor market could put pressure on the pair GBP/USD. As a result, the pound sterling would eliminate all past achievements.
If the dollar will rise again, then quotes of the pound will move down. The first objective of the sellers - the level of 1.2250. Successfully overcoming it, prices will fall towards 1.2150 or below 1.2100.
At the same time strengthening of the pound would lead to growth of the last above resistance 1.2350. Further development of the dynamics of the pair will be held towards the 1.2400 and 1.2450 marks.

The pound did it

Surprisingly, but fact - the pound found strength for growth. The British currency opened the new week with a gap, collapsed against the dollar to a mark of 1.2154. However, by the end of the day, taking advantage of the weakness of the dollar, the pound has returned to the resistance of 1.22. Market participants still do not believe that the pound is able to compensate the decline and to recover above 1.24. Fears of fierce Britain from the EU-ended output procedures, significantly increased risks of inflation exceeding the target value of 2%, the drop in GDP, as well as the continuing catastrophic pace of capital outflows remain for pound status as the main market outsider. Today we are expecting the data on inflation in the UK. Considering that 23 June the British currency fell by more than 15%, it can be assumed that the consumer price index will overwrite the multi-month highs. If these assumptions are justified, the consumer activity in the country will be threatened, provoking even greater loss in the national currency.
Recommendation on GBP/USD: Sell, TP - 1,20, SL - 1,23.

GBP - keep on selling

GBP/USD should be sold for two reasons. First, the published on Wednesday FOMC meeting minutes did not disappoint investors, because they was not negative, but rather pointed to the need to raise interest rates. In the current environment, where the trend is gaining momentum in the dollar (the dollar index USDX basket is now at the maximum for the last 7 months) the absence of bad news from the US is in itself positive. Secondly, strengthening the greenback put pressure on the commodity market instruments, primarily for oil, as the value of all commodities are denominated in the US currency. Brent crude oil can not confidently fix to a maximum of the current year at $52.99/barrel and in the near future we can expect a reduction of quotations to the psychological level of $50/barrel, which will increase the pressure on the sterling. Against this background, during the day we should opened short position on the growth of quotations in the area of 1.2200/1.2250 and take profit at the level of 1.2120.