© Dukascopy Bank SA
Last week, the second popular pair on the foreign exchange market continued the tendency of the previously observed period. By starting a new trading week on Monday, the British pound paused its gains versus the US dollar, as another major drop in oil prices triggered risk-off sentiment and boosted the Greenback. In the middle of the week, the Sterling entered negative territory as investors were digesting the unchanged interest rates by the Federal Open Market Committee, following the long awaited initial rate hike from the record low recorded in December. The next day, the Pound erased Wednesday's losses and reclaimed some ground on Thursday as Cable found support in GDP growth, while the US dollar took a hit from durable good orders that indicated reduced business investment. According to the Office for National Statistics the UK GDP for the fourth quarter improved from 0.4% to 0.5%, while the yearly change declined from 2.1% to 1.9%. Nevertheless, at the end of the week, the pair dropped sharply, erasing all previous gains returning back to the immediate bearish trend.
This week the pair's sentiment has become neutral, since now as many as 50% of all votes are bullish on the cross. The average expectation for February 9 stays around the 1.43 level. This week the UK is to publish survey data on construction activity on Tuesday, as well as a report on service sector activity on Wednesday. Moreover, on Thursday, the Bank of England is to announce its interest rate decision and publish the minutes of its monetary policy meeting. The bank is also to publish its quarterly inflation report. The BoE Governor Mark Carney, in turn, is going to hold a press conference to discuss the report.
The US is to round up the week with the closely watched report on nonfarm payrolls and data on the trade balance.
© Dukascopy Bank SA