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Good day, dear traders!
So, at the end of today's meeting, the Bank of England did not change the parameters of its monetary policy and kept everything as it is. The main interest rate remained at 0.10%, while the volume of bond purchases remained at 745 billion pounds. This decision fully coincided with market expectations. The next important event for the GBP/USD currency pair will be tomorrow's statistics on the US labor market, the publication of which is scheduled for 13:30 London time.
And today, investors will be interested in initial applications for unemployment benefits, which will be published at 13:30 (London time), as well as a speech by a member of the Open Market Committee Kaplan, which is scheduled for 15:00 London time.
In addition to tomorrow's labor reports from the US, investors are interested in the situation with the spread of COVID-19. Let me remind you that the United States, Russia, Great Britain, China and some other countries are working hard to create a vaccine against coronavirus, and in some places it is already at the final stage. Also, the attention of market participants is focused on the negotiations between the White House administration and Democrats from the US Congress regarding the adoption of another package of assistance to the American economy. According to United States Treasury Secretary Steven Mnuchin, a compromise on this important issue can be reached by the end of this week.
Daily
After forming three consecutive Doji candles, yesterday's trading ended with the appearance of a bullish candle with the closing price at 1.3110, that is, above the important technical level of 1.3100. This is a positive factor for the pound bulls, however, the biggest difficulties for them are still ahead. In order to show the seriousness of their intentions, players need to break through the resistance of sellers, which passes in the price zone of 1.3170-1.3200.
Today, the pair has already risen to 1.3182, but has pulled back a little and is trading near 1.3150 at the moment of writing. If the growth continues and today's trading closes above 1.3200, I recommend not to rush to clear conclusions about further strengthening of the instrument. After all, the final point in weekly trading will be set by tomorrow's statistics on the US labor market. Although, undoubtedly, the closing of today's trading above 1.3200 can be perceived as a desire of the market to continue moving in the north direction.
H4
The current candle on the four-hour chart of the pound/dollar pair once again demonstrates the strength of sellers' resistance in the area of 1.3170-1.3200. If this candle is formed as a bearish reversal pattern, why not short sell? In this case, the nearest target will be the 1.3100 mark, near which, in turn, we should already consider the possibility of a reversal and opening long positions for the pound/dollar pair. After all, I consider buying to be the main trading recommendation for this currency pair. However, we will see what the US labor reports will look like and how market participants will react to them. In my personal opinion, in order for the situation to radically change in favor of the US currency, we need very strong figures on the change in the number of people employed in non-agricultural sectors of the economy, the unemployment rate and the growth of average hourly wages. The probability that all these three most important indicators will come out very strong is extremely small. If so, market participants will use the slightest negative to further sell the US dollar.
Good luck with trading!
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