26.02.201810:18 Forex Analysis & Reviews: The yen and the British pound may continue to grow

Statements by representatives of the Fed last Friday were unlikely to be welcomed by investors, as they did not contain clear intentions, by and large, regarding an early rate hike.

The whole reason was the recent surge in volatility in the stock markets. In fact, this volatility has poured into the largest sale since the crisis of 2008. The main reason for the fall was a further increase in interest rates in the U.S., which makes borrowing expensive, and the bond market more attractive.

On Friday, Fed spokesman, William Dudley, said that the Fed's balance sheet cuts smoothly, and bond purchases remain an effective tool for the Fed. As for the final decision regarding the size of its balance sheet, the regulator has not yet made such a decision. It is expected that the balance of the Fed can be reduced to 3 trillion or more of high volume.

FRS-Cleveland President Loretta Mester reported on Friday that economic growth has taken root, and inflation should return to a steady 2% in the next couple of years. In her opinion, the monetary policy of the Fed will normalize in the coming years, but the current guidelines of the Fed will not change anything.

Taking into account these statements, as well as the Fed's report, which was published at the end of the week. The conclusion that the committee will "slow down" with higher rates in early spring of this year begs itself, which makes the US dollar less attractive to its rivals in form of risk assets.

The British pound continued to receive support amid increasing conversations that the Bank of England will again raise interest rates in May. However, according to some analysts, the pound still has room for a fall on the background of political events. Also, do not forget about the date, March 29, 2019, when the U.K. will exit the European Union.

As for the technical picture of the GBPUSD pair, its consolidation above 1.4000 points in presence of support from large buyers in the market. This opens up good prospects for updating the highs around 1.4070 and returning to the level of 1.4145, which can severely limit the upside potential in the pair.

The Japanese yen resumed its growth against the US dollar after the Governor of the Bank of Japan, Haruhiko Kuroda, rejected the need to immediately review the policy of managing the yield curve. Kuroda said that changes are not required, as there is good progress both in the economy and in the change in the level of inflation.

From this, we can conclude that the Bank of Japan is unlikely to seriously change its policy in the near future.