09.02.201801:27 Forex Analysis & Reviews: The Bank of England is hinting at a faster rate hike

The British pound immediately rose against the US dollar in the morning and continues to be in demand among traders after the Bank of England made a definite hint at an earlier increase in interest rates than what was previously expected.

The main decision today was to maintain the key interest rate in the UK without changes at 0.5%. The volume of redemption of bonds was also kept unchanged. The decision to keep the key rate at the level of 0.5% was taken with the ratio of votes of 9 to 0.

As noted above, a special demand for the pound appeared after the Bank of England announced that it is likely to raise the key rate faster than expected in November last year.

As for the prospects for economic growth, the forecasts were also revised positively with a reference to strengthening the world economy.

The Bank of England expects that inflation will exceed the target level of 2% in the first quarter of 2021 and the forecast for GDP growth for 2018, 2019, and 2020 was revised to 1.8%. As for the unemployment rate, the economists of the Bank of England forecast its value in the region of 4.25%.

The message about the rates was confirmed by the Governor of the Bank of England Mark Carney. According to him, Brexit continues to put pressure on companies' investments but British exporters are in a good position due to the depreciation of the pound. According to Carney, the rate increase will be more gradual than in the previous cycles.

A good rebound of the British pound is breaking the current downward picture. The main target of buyers of the GBP / USD pair is now a strong resistance in the area of 1.3990. A breakthrough of this level will lead to a new upward wave with an exit at 1.4060 and 1.4130.

The European currency ignored good data on Germany and statements by ECB representatives in the first half of the day and continued to decline against the US dollar.

According to the data of the federal statistics agency Destatis, the export of goods from Germany increased by 6.3% last year compared to 2016 and reached a maximum of 1.3 trillion euros.

Imports for the reporting period increased by 8.3% to more than 1 trillion euros. This influenced the positive balance of Germany's foreign trade, which in 2017 fell to 244.9 billion euros.

The representative of the European Central Bank, Jenas Weidman, said today that there is no need for a substantial extension of the QE and that the ECB should not be influenced by the fall in shares and the strengthening of the euro. However, his statements remained undetected by traders.