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The Bank of England, following the Federal Reserve, made it a fashion to hold emergency and unscheduled meetings. After the start of the US session, and even after the publication of data on applications for unemployment benefits in the United States, the world learned that the Bank of England lowered the refinancing rate from 0.25% to 0.10%. It took the market about half an hour to realize what had happened, and only after that had the pound dropped. At first, it went up rather by inertia, where it was pushed by just the same data on applications for unemployment benefits. At the same time, the pound is already showing good growth, which, amid the fall of recent days, rather resembles a slight rebound. We can say that the pound has nowhere else to fall. Especially since the BoE lowered the refinancing rate to the lower limit of the previously designated range of interest rates. Most likely, the current growth is the result of the assumption that the BoE will not further reduce the refinancing rate.
At the same time, data on applications for unemployment benefits in the United States really scared the market, and most likely, they are the main reason for the observed weakening of the dollar. After all, it is cheaper not only in relation to the pound. So, if the number of repeated applications for unemployment benefits increased by 2 thousand instead of 29 thousand, then the number of primary applications increased by as much as 70 thousand.We expected an increase of 8 thousand. The total number of applications for unemployment benefits increased by 72 thousand, which is quite a lot, and indicates a serious possibility of deterioration of the situation in the labor market as a whole.
Number of initial applications for unemployment benefits (United States):
No macroeconomic data will be published today, so, in theory, the market should gradually consolidate and calm down. However, hysteria over the coronavirus can present unexpected surprises. At the same time, the market is extremely volatile, and even the emerging band is so wide that it would normally look impossible.
In terms of technical analysis, we see that the external background continues to shake the British currency, showing ultra-high activity on a daily basis. In fact, after such a significant decline, the quote went into a sideways oscillation, having a fairly wide range of 1.1450/1.1710. It is worth noting that the existing zone focuses on itself two factors of influence on the quote at once. The first is the external background that prevents the pound from moving into a significant recovery. The second is the record lows that frighten most market participants.
Looking at the trading chart in general terms, we see that the global downturn has updated the low, where it is now the extreme mark of 1.1411.
It is likely to assume that the fluctuation in the specified range of 1.1450/1.1710 will continue, where a temporary flutter in the range of 1.1660/1.1710 is not excluded, followed by a reverse course.
Concretizing all of the above into trading signals:
- Long positions are considered higher than 1.1670 with the prospect of a move to 1.1710.
- We consider short positions in case of price taking lower than 1.1600 with the prospect of a move to 1.1500.
From the point of view of a comprehensive indicator analysis, we see that technical tools on the hourly and daily periods keep a sell signal, while minute intervals work alternately on the range.
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