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Yen falls back down after BoJ balksThe Japanese yen continues to post strong swings this week and is up sharply on Friday. USD/JPY is trading at 134.67 in Europe, up 1.86% on the day. It's been a busy week, with the markets still digesting some dramatic moves by central banks. The Fed and SNB delivered massive salvos in their fight against inflation, and the BoE continues to tighten, albeit at a more modest pace. The week wrapped up with the Bank of Japan policy decision earlier in the day. These meetings are usually on the dull side, with the central bank merely reaffirming its ultra-loose policy, with the occasional tweak. Today's meeting was closely watched, however, as the BOJ's yield curve stance has been under pressure and there was speculation that the BoJ might retreat and release the cap of 0.25% on 10-year JGBs. In the end, the BoJ did not blink or budge, maintaining its policy for yield curve control and QE. The BOJ reaffirmed it will continue its policy of rock-bottom rates, even though other major central banks are tightening policy, as we saw this week with the Fed, BOE and SNB. Governor Kuroda has insisted that monetary easing remain in place, given Japan's slow recovery from the Covid-19 pandemic. With inflation barely at 2%, the central bank's target, Kuroda can afford to continue his loose policy and tenaciously defend the BoJ's yield curve. The BoJ didn't adjust policy today but it was noteworthy that the policy statement added the exchange rate to its list of risks, something we haven't seen in previous statements. The yen hit a 24-year low at 135.60 earlier this week and could fall even further. The Bank is sending a message that it is monitoring the exchange rate, but I question whether this will deter the markets from continuing to test the yen - previous jawboning from the BoJ and Ministry of Finance didn't succeed in stemming the yen's slide, and we could well be on our way to a 140 yen if the US/Japan rate differential continues to widen. USD/JPY is testing resistance at 133.14. Above, there is resistance at 1.3585 There is support at 131.72
by OANDA
Pound jumps ahead of Fed, BOE meetingsThe British pound is in positive territory on Wednesday. This follows an abysmal 5-day slide which saw the pound fall as much as 600 points. In the North American session, GBP/USD is trading at 1.2060, up 0.53% on the day. All eyes are on the Federal Reserve, with the FOMC rate decision later today. The Fed is clearly under pressure as inflation surges with no peak in sight - CPI accelerated to 8.6% in April, up from 8.3% in March. This was the highest inflation rate since 1981. The Fed's aggressive stance may shift into overdrive, with a 75-bp hike priced in by the markets at almost 100%. Just a few days ago, the most likely scenario was a 50-bps increase, but hawkish winds are blowing, and a 75-bp move will likely elicit a sharp response from the financial markets. Investors will also be closely monitoring the rate statement and Fed Chair Powell's press conference. I would not be surprised to see the US dollar cash in with strong gains following today's meeting. The Fed finds itself in a tough spot as it struggles to combat inflationary pressures, which are now more than four times higher than the Fed's inflation target of 2 per cent. The price for the Fed's aggressive rate-hike cycle could well be a recession, but Fed policy makers clearly prefer a (hopefully) short recession rather than inflation expectations becoming unanchored. The big question is will the Fed manage to guide the US economy to a soft landing as it continues to aggressively raise rates. After the Fed is done, attention will shift to the Bank of England, which holds its policy meeting on Thursday. The likely scenario is that the cautious BoE will raise rates by a modest 25 bps, but we could see a larger hike if the Fed is overly hawkish at its meeting. With unemployment in the UK at a low level of 3.7%, the BoE has room to be more aggressive with its monetary policy. As for the British pound, a 0.25% hike won't be of much help. If the BoE surprises with a larger rate increase, the pound would likely respond with gains. GBP/USD faces resistance at 1.2108 and 1.2215 There is support at 1.1916. This is followed by 1.1772, a major support level.
by OANDA
1
UK inflation soars to 9 per centThe British pound has taken a tumble after April CPI jumped to 9.0% YoY, up sharply from 7.0% in March. GBP/USD has fallen 100 points today and is trading at 1.2390 in North American trade. UK inflation continues to run at a 40- year high, and the cost of living crisis is undoubtedly keeping Finance Minister Sunak and BoE Governor Bailey awake at night. Core CPI didn't provide any relief, as it rose to 6.2%, up from 5.7% prior. This indicates that inflationary pressures are broad-based and aren't about to ease anytime soon. The only positive in the CPI release was that it was a bit lower than the forecast of 9.1%, but I'm sure few in the City of London are taking any solace from that tidbit. The BoE has essentially raised the white flag on the inflation front, saying that many of the factors at play, such as the Ukraine war and soaring energy costs are beyond the Bank's control. The BoE has warned that things could get worse, projecting that inflation will top 10% later this year and warning of a likely recession. Bailey & Co. are doing their best to catch up with the inflation curve as they aggressively hike rates while trying not to choke off economic growth. With the spectre of 10% inflation looming, confidence in the BoE may be ebbing. Like the Fed, the BoE has come under heavy criticism for not reacting to spiralling inflation quickly enough, and the 25-bps incremental hikes may not prove to be sufficient. The Fed has gone full throttle with a 50-bps hike and more to follow, and pressure is mounting on the BoE to follow suit. The US is also facing spiralling inflation, and Fed Chair Powell has signalled that the Fed will deliver 0.50% hikes in June and July. Former Fed Chair Bernard Bernanke weighed in on Fed policy, saying that it was a mistake for the Fed not to react earlier to rising inflation. Bernanke also warned that the US economy could face stagflation in the next year or two. GBP/USD has broken below support at 1.2436. Below, 1.2374 is under pressure There is resistance at 1.2557 and 1.2619
by OANDA
GBP/USD - Can it Break Major Support?The pound has come under heavy pressure recently, particularly against the dollar which has been performing well against the broader market. While the BoE is poised to continue its run of a rate hike at every meeting, making it one of the more hawkish central banks, the moves in the pound are also a reflection of the challenges facing the UK economy, which the central bank believes is heading for double-digit inflation and a recession. The question is how far the pound will fall and we're already starting to see signs of the sell-off losing some steam. We've seen a brief correction following a clear divergence on the 4-hour chart, but there's little to suggest it's in the midst of a larger correction. The early sign of divergence that we're seeing on the daily chart on approach to 1.20 - which has historically been a massive level of support - may offer hints of what's to come. If the pair does hit new lows in the coming weeks, the momentum indicators could provide a clue as to whether 1.20 is going to break or hold.
by OANDA
Pound yawns after Bailey warningsThe British pound is trading quietly on Monday, as the currency markets have started the week with a whimper. BoE Governor Bailey testified before lawmakers earlier today, and his message was a grim one. The BoE has predicted that soaring inflation could top 10%, and Bailey today admitted that "this is a bad situation to be in".  Bailey said that the Ukraine war could cause a further energy shock and that his concern about the surge in food prices was "apocalyptic". Bailey gets full credit for not sugar-coating what is a difficult economic situation, but his candidness will not help support the struggling pound, which hasn't posted a winning week since mid-April. I appreciate Bailey's honesty, but the BoE has run into a credibility problem with its rate policy in recent months, and it's questionable whether his message that dark times lie ahead is the way to restore confidence in the central bank. The economic picture in the US is brighter, but the Fed's aggressive policy will lead to a slowdown in growth. The big question is can Fed Chair Powell guide the economy to a soft landing and avoid a recession. On Sunday, Goldman Sachs lowered its forecast for US growth to 2.4% in 2022 and 1.6% in 2023, down from 2.6% and 2.2%, respectively. Federal Reserve officials last week reiterated their intention to deliver 0.50% rate increases at the June and July meetings, which will help limit US dollar gains. At the same time, any US data that is worse than expected could lead to calls for a hike of 0.75%, which would be bullish for the US dollar. 1.2199 remains under pressure in support. Below, there is support at 1.2056 GBP/USD faces resistance at 1.2272 and 1.2418
by OANDA
Sterling falls below 1.23The British pound has stabilized on Friday, after sustaining huge losses a day earlier. GBP/USD is trading at 1.2342 in the European session, down 0.11%. Earlier, the currency fell to 1.2276, its lowest level since June 2020. The BoE dutifully raised interest rates at its meeting on Thursday, but the market reception was a chilly one. GBP/USD plummeted a staggering 2.21% on the day. Investors gave a thumbs-down to the grim message from the central bank, as a fourth straight rate hike in as many meetings became an afterthought. The BoE's growth forecast for 2022 remained at 3.75%, but it slashed the 2023 projection from 1.25% to -0.25%. At the same time, the central revised upwards its inflation forecast for Q4 to above 10%, up from 8% in an April forecast. The 'double-whammy' of higher rates and a deteriorating economic outlook sent the British pound reeling after the BoE meeting. The rate decision was a 6-3 vote, with all three dissenters voting in favor of a 0.50% rate hike. This surprised the markets, which had expected an 8-1 vote. There is a deep split in the MPC, with Governor Bailey acknowledging after the meeting that an uncertain economic outlook had led to a range of views in the MPC. Such a statement can hardly be expected to instill confidence in the British pound on the part of investors. In its policy summary, the BoE signalled that more rate hikes are coming, and also dropped the word "modest" to describe upcoming rate hikes. Yet the markets were not impressed  - the 0.25% increase was modest, and with the BoE warning about 10% inflation, it's clear that it will take quite some time before rate hikes do the job and wrestle down sizzling inflation. The US dollar initially lost ground after the Fed rate decision on Wednesday, as investors seized on Fed Chair Powell's statement that the Fed was not considering a 0.75% rate hike. The greenback has since bounced back, as the markets digest that the Fed plans to be aggressive with further 0.50% hikes in its battle to bring down inflation. There is resistance at 1.2612 and 1.2719 GBP/USD tested support at 1.2272 in the Asian session. Below there is support at 1.2179
by OANDA
Euro May Be Readying to Reverse Against British Pound Post BoEThe Euro may be readying to push higher against the British Pound in the aftermath of Thursday's Bank of England monetary policy announcement. There, it was revealed that two policymakers seemed further hiking as 'not appropriate'. EUR/GBP has been steadily falling since 2020, with recent months on the premise of a more hawkish BoE compared to the European Central Bank. This could be changing... EUR/GBP cleared a falling trendline from September, as well as taking out the March high. That has exposed November and September 2021 levels before the 0.8695 - 0.8731 resistance zone nears. FX_IDC:EURGBP
Long
by QM_Dubrovsky
Pound takes a tumble after BoE hikeThe British pound is fading badly on Thursday. GBP/USD has dropped a staggering 2.15% today and has fallen below the 1.24 line for the first time since July 2020. After the BoE decision, market focus has shifted to the elections in Northern Ireland later today. A Sinn Fein victory could weigh on the wobbly pound. The BoE raised interest rates for a fourth straight time since December, bringing the Official Bank Rate to 1.00%, its highest since 2009. Yet the market reception to the BoE move was decidedly chilly, as the pound has plunged almost 2% today. Why the sour reaction from the markets? The 0.25% was a modest move and it's questionable if it will have much impact on soaring inflation. In March, CPI rose to 7.0%, up from 6.2%, and the BoE has warned that inflation could surpass 10%. The modest rate hike passed by a vote of 6-3, surprising the markets which had expected an 8-1 vote. Two MPC members called for a 0.50% hike, which reveals a sharp split within the MPC. Governor Bailey admitted after the meeting that an uncertain economic outlook had led to a range of views in the MPC, and such a statement can hardly be expected to instill confidence amongst investors. The BoE cannot be blamed for not being aggressive - it is well into its rate-hike cycle and the policy summary noted that "some degree of further tightening in monetary policy may still be appropriate in the coming months". In addition, the BoE dropped the word "modest" to describe upcoming rate hikes. Yet the markets appeared to focus on the split vote and the warning from the BoE that the country could face a sharp economic downturn, and the thumbs-down response has sent the pound sharply lower. As expected, the Federal Reserve raised rates at its meeting by a half-point, the largest increase in 20 years. The Fed signalled that it will deliver additional half-point hikes in June and July, with Fed Chair Powell stating that the FOMC was not "actively considering" a 0.75% increase. The Fed is also implementing quantitative tightening with a reduction in the balance sheet. Starting in June, the Fed will sell USD 45 billion/mth in assets, which will rise to USD 95 billion/mth in September. In sharp contrast to the BoE's hike, the financial markets reacted positively, as investors believe that the Fed's rate hikes can curb inflation while ensuring a soft landing for the economy and avoiding a recession. GBP/USD faces resistance at 1.2612 and 1.2719 There is support at 1.2272 and 1.2179
by OANDA
Bullish sentiment for 2022 on High Performance Blockchain (HPB)High Performance Blockchain (HPB) could finally be in a position to realize the potential that many industry experts predicted for the chain back in 2018. The HPB chain is a layer 1, main-net Ethereum EVM-compatible chain, but it's unique feature is that it combines dedicated, custom-developed blockchain hardware, with the Ethereum Virtual Machine (EVM) software. The custom hardware, known as the " Blockchain Offload Engine " (BOE) accelerator card, is in some ways similar to a computer graphics card, only the BOE card was developed from the ground-up by HPB CEO Xiaoming Wang , to specifically run the HPB blockchain network. It is currently the only blockchain the world to fuse hardware and software in this way. The BOE card is what allows HPB to run at 5000tps (transactions per second) when compared to the Ethereum Network which runs at 15tps. In addition, the associated "Gas" fees with the HPB chain are around $0.0001 per transaction, compared to Ethereum's $50 per transaction at certain times of the year. HPB is faster, cheaper and more eco-friendly than Ethereum, utilizing a Proof of Performance (PoP) consensus mechanism, but the real jewel in the crown is the "Hardware Random Number Generator" , referred to as HRNG. The reason people in the industry are becoming so bullish on HPB right now is because many industry experts predict that " GameFi " will be the next big thing in blockchain. Gaming, with connections to blockchain, is estimated to be worth $55 Billion USD in 2022 according to Crypto.com - One of the elements critical to the success of GameFi, is the ability to harness PROVABLE random numbers , which are used to allow games to be completely non-deterministic and unbiased. Up until now, blockchains have typically used "pseudo" random number generators (PRNG) which are flawed. They used a seed value to generate random numbers, and these random numbers are based on mathematical calculations and algorithms. The issue with this type of mechanism, is that if someone knows what the seed algorithm is, then they can ultimately deduce the "random" number derived from it. Quite simply, users could not trust a platform where the random numbers are not truly random. There is room for misuse with this type of pseudo random number generator, and it is part of the reason why games, casinos and lotteries have struggled to make an impact thus far in the blockchain industry. HPB aims to solve this issue with HRNG which is known as a "True" random number generator (TRNG) as instead of deriving random numbers from a software-calculated seed value, it derives its seed value from the BOE accelerator card hardware. TRNG's can only be certified as provably fair if the seed value comes from naturally-occurring phenomena. High Performance Blockchain use their BOE card to monitor tiny micro-voltage fluctuations (down to 0.0001 volt) on the ever-changing power-draw of the BOE card, and then use an analog-to-digital hardware chip to convert those values into a 256-bit hexadecimal string. This constantly-changing string is then used as the seed value to generate truly provable random numbers. Better still, the random numbers can be generated for free by software developers wishing to develop DApps on the HPB chain. Unlike competitor oracle solutions such as Chainlink (LINK) VRF, which can cost up to 0.2 LINK tokens per random number called (approximately $5 in early 2022), the HPB HRNG supplies the provable random numbers at every 6-second block for free. This could revolutionize the blockchain industry, and DApp developers will be looking to take advantage of HPB random numbers as the GameFi sector matures. In addition, HPB are now making strides to provide the necessary developer tool-sets that DApp developers come to expect, and they are also developing a decentralized Random Load-Balanced (RLB) crypto bridge to connect to other EVM chains including Polygon, Binance Smart chain, Avalanche, Fantom, Tron and others. To put some perspective into upside potential of the HPB project, the current MCAP of High Performance Blockchain is £3 Million USD - It is a layer 1 main-net blockchain and the only chain in the world to fuse hardware (BOE card) with software. This is in comparison to a layer 2 sidechain such as Polygon which cannot generate TRNG random numbers on chain, and has a current MCAP of £11 Billion USD - So in effect, HPB would need to 4000x in value to reach parity with a chain that many blockchain technical experts believe to be an inferior chain to HPB. HPB is also running a hackathon competition on DevPost in May, inviting developers from all around the world to come and try out the chain. The HPB Global Telegram community have never been this bullish.
Long
by crypto-market-analyst
3
Pound shrugs as UK GDP revised upwardsThe British economy performed better than expected in the fourth quarter. Final  GDP rose by 1.3% in Q4 of 2021, upwardly revised from the first quarterly estimate of a 1.0% gain. Final GDP beat the forecast of 1.0%. On an annualized basis, GDP in 2021 jumped 7.4%, a massive turnaround from -9.3% in 2020. The economy has almost completely recovered from the pandemic, with GDP currently only 0.1% below the pre-Covid level in Q4 of 2019. The recovery is certainly good news, but there are dark clouds nearby, namely, soaring energy prices and the spectre of stagflation. BoE Governor Bailey had a stark warning for consumers this week, saying that real incomes would suffer a "historic shock". The BoE has raised interest rates three consecutive times, but this hasn't slowed down inflation, which accelerated to 6.2% in February, a 30-year high. The Bank says the Ukraine war could push inflation as high as 8% in Q2 and even higher in the third quarter. It seems that double-digit inflation is a real possibility later this year, which would truly be a nightmare scenario for Governor Bailey and Finance Minister Rishi Sunak. The BoE doesn't have a magic answer for surging inflation, which has also reached the US and other major economies. The BoE, can, of course, hike interest rates in order to subdue inflation, but the danger is that high rates could choke off economic growth. Governor Bailey has a formidable challenge of charting out a rate-tightening cycle in which interest rates are high enough to lower inflation but don't derail the recovery. Time will tell if Bailey will "get it right" with the pace and size of upcoming rate hikes. GBP/USD faces resistance at 1.3281 and 1.3380 There is support at 1.3102 and 1.3022
by OANDA
Pound jumps on strong mfg. dataGBP/USD has resumed its upswing after a quiet start to the week. GBP/USD is trading at 1.3261 in the North American session, up 0.75% on the day. It was just one week ago that the pound was in the dumps, falling to the symbolic 1.30 line. Since then, the currency has gone on a tear, gaining around 2%. With plenty of turbulence and uncertainty, from the Ukraine war to oil prices to sizzling inflation, we could see further volatility in the currency markets in the short term. UK industrial order expectations for March jumped to 26, up from 20 in February and above the estimate of 16. Manufacturing output remains strong, as the sector continues to expand. The strong reading helped boost the pound today. The UK releases the February inflation report on Wednesday, with the markets bracing for an acceleration in inflation. The headline reading is expected to rise to 4.2% YoY, up from 4%, while Core CPI is projected to climb to 5.0%, up from 4.4%. The BoE continues to revise its inflation forecast upwards and has warned that CPI could hit a staggering 10% by the end of the year. The Bank has raised rates three straight times and seems likely to continue tightening in order to curb red-hot inflation. The surge in inflation has made government borrowing more expensive, and the cost of servicing the UK's national debt continues to rise. This poses a serious problem for Chancellor Rishi Sunak, who will deliver the annual budget on Wednesday. Consumers and businesses will be looking for goodies in the budget, but Sunak may be limited in what he can do, as he must allocate billions of pounds more for borrowing costs as a result of inflation and higher interest rates. In the US, Fed Chair Powell delivered a strong, hawkish message to the markets on Monday. Powell came out swinging, saying that the Fed was prepared to be more aggressive in raising rates if needed. Powell's message was crystal clear, as he noted that “the labor market is very strong, and inflation is much too strong” and said that the Fed would not hesitate to implement 50-basis point increases at future meetings if necessary. In response to Powell’s hawkish message, US Treasury yields rose on Monday to their highest level since 2019 and the upswing has continued on Tuesday, with the 10-year Treasury yield rising to 2.37%. GBP/USD has broken above resistance at 1.3259. Above, there is resistance at 1.3341 There is support at 1.3130 and 1.3048
by OANDA
1
GBPCHF could try to break the long lasting trend...or notGBPCHF is really undecided nowadays. It has a long lasting trend to fall since the January of 2000. Now it has formed a giant triangle bottoming at around 1.18. Now the Bank of England is in a rate hiking cycle while the Swiss National Bank does not indicate a rate hike any time soon, so a strengthening of the pound is very likely. Besides that, the shockwaves of Brexit are slowly fading, Boris Johnson and his administration set a clear path for the economy (hopefully a good path), so everything is in order, in theory. On the other hand, the war in Ukraine, the sanctions on Russia, the supply chain problems and the UK's firm anti-russian position and rethoric bring some uncertainty to the equation. On the long run I expect a possible break-out attempt to the upside, targeting the upper end of the falling yellow falling channel firs (around 1.247), then the upper end of the blue triangle (around 1.26). Be cautious! The other scenario is a rapid fall to the bottom of the channel (1.194), then to the bottom of the triangle (1.18). Follow me for more updates on the pair and other assets. Don't forget: money is weird and unpredictable, so plan for all possible scenarios and hedge your positions!
Long
by weirdmoney
EUR/GBP - Can it Break the Downtrend?The euro has been performing relatively well against the pound recently after a prolonged downward spiral going back to late 2020, but can it keep it up? The pair was given another boost by the Bank of England on Thursday, despite the MPC agreeing on a third consecutive rate hike taking the base rate to 0.75%. What weighed on the pound - and therefore lifted this pair - was the fact that one policymaker, Deputy Governor Jon Cunliffe, voted against raising interest rates, while the committee also tweaked the accompanying text to appear moderately less hawkish. That may not sound like much, what with an enormous majority still favouring a rate hike and a small tweak barely altering the outlook, which remains highly uncertain anyway. But it's all very deliberate and intended to send a message to the markets that they're priced too aggressively and not in tune with where the BoE sees rates going. And the response in the markets has been to pare back further hikes this year to four from five. This has dragged on the pound today and allowed EURGBP to hit its highest level since early February. And this may be where the pair could start to run into some resistance. The momentum indicators on the 4-hour chart don't suggest they will but it will be interesting to see how they look over the coming days as this was an unexpected event-driven reaction that may not be enough to carry it much further. The area between 0.8450 and 0.85 is littered with potential resistance points from prior levels of support and resistance to the 200/233-day simple moving average band. Rallies have repeatedly failed around this band since the pair broke below here at the start of last year so a break above here would be very significant. The next test above in that event could fall around 0.86 but a breakout of that significance could signal a much stronger move to the upside. Another rejection there could have traders looking lower once more, which may mean a continuation of the long-established trend and perhaps a move back towards levels not seen since the Brexit vote almost six years ago.
by OANDA
1
GBP/USD - Testing Key Support Ahead of Fed and BoEThe pound has been trending lower against the dollar since the Russian invasion of Ukraine as traders have sought the safety of the greenback in times of stress. But what's interesting in recent days is that while market sentiment has improved, the pair has continued to slide. And with it now approaching 1.30 - a major historical psychological barrier - ahead of both the Fed and BoE meetings this week, what's next for the pair? For a bit of context, both central banks are fully expected to raise interest rates this week and multiple times more this year. While the Fed is only just embarking on its tightening cycle, a 25 basis point increase this week would be the third consecutive hike for the BoE, with the previous two coming in December (15 basis points) and February (25 basis points). The perceived hawkishness of both could be key in determining the path of travel for the pair over the course of the week, with the market's pricing in at least five more hikes from the Fed and four more from the BoE this year (on top of this week). That and, of course, developments in Ukraine. It's interesting that, while 1.30 looks to be coming under some pressure at the time of writing, the momentum indicators on the 4-hour chart don't really offer much confidence. The divergence we're seeing suggests a breakout will be challenging and unless we see a shift in the MACD and stochastic, perhaps even vulnerable to a false breakout if it does move below. The longer-term trend is clearly against it though and if we do see a corrective move, the key levels that stand out are obviously 1.31 and 1.32 being notable recent areas of support and resistance on the way down.
by OANDA
GBPCAD shark pattern GBPCAD has formed a bullish shark pattern and price is approaching the lower band of a solid range in daily timeframe, we can in addition see a strong RSI DIVERGENCE in h4 chart, this situation is really common where there is a bottom in a market structure, the accumulation structure is clearly working and the pair will push towards the 0.50% retracemtn in next days around 1.6960. Use a proper money management and pay attention to BOE DECISION ON INTEREST RATES ON THURSDAY, if the MPC votes for a 50 bp hike there wil be a strong really, if there will be a 25 bp hike the gbp will remain the same (maybe a 30/ 50 pip move but nothing important). This analysis has been realized by Francesco Drago, founder of DRAGO INVESTMENTS Francesco
Long
by Dragon_Investments
Pound steady as retail sales reboundUK retail sales rebounded in January, with a gain of 1.9% m/m, its highest monthly gain since April 2021. The increase followed a decline of 4.0% in December and beat the consensus of 1.0%. The Omicron variant of corona continues to have a significant impact on consumer spending. The December drop was a result of consumers doing their Christmas shopping in October and November, while the January rise reflected the easing of health restrictions. With Covid regulations set to expire due to falling infection rates, we should see consumer spending continue to accelerate. The Bank of England remains under strong pressure to raise rates at its meeting in March. The markets have priced in a quarter-point hike in March at 100%, and the BoE will likely follow up with more hikes until inflation, which is at a 30-year high, is brought down. We can expect the BoE to deliver a more gradual pace of rate hikes than what has been priced by the markets. The Russia/Ukraine border remains extremely tense, although a feared invasion on Wednesday did not materialize. Tensions heightened on Thursday after a skirmish in a border region which the West feared was a pretext for a full-scale invasion. This sent the financial markets tumbling as risk sentiment dissipated. The US has disputed Russia's claim that it has reduced its forces on the border and says an invasion could occur at any time. Still, there is a ray of light for a diplomatic solution, as the US and Russian foreign ministers will meet next week, so an invasion appears to be on ice, at least for now. It's a safe bet that market direction next week will be largely set by developments in the Ukraine crisis and market participants should be prepared for volatility. There is resistance at 1.3640. and 1.3719 GBP/USD has support at 1.3487 and 1.3413 .
by OANDA
GBP/USD - Can it break 1.37?The next week could be really interesting for cable, with the Fed and BoE being among the two most aggressive central banks and inflation in both countries continuing to rise rapidly. The pair ran into resistance last month around 1.37, where the 200/233-day SMA band crossed the 50 fib level to provide a considerable barrier of resistance. It's been on the rise again over the last couple of weeks but the past five days has seen more volatility than direction. Both countries are seeing high inflation and five or six rate hikes are already priced in for the central banks. The question is how much further it can go? The recent trend has been bullish and if that continues, 1.37 will once again be key for the same reasons. A move above here would be extremely bullish, with the next test coming around 1.3834 - prior high and 61.8 fib level. Equally, a rotation lower could also send a strong signal, especially coming ahead of the previous high.
by OANDA