The Trend Of The Pound (GBP) And The Actions Of The Bank Of England (BoE) Have A Strong Correlation

Bank of England survey highlights easing price pressures

Pound tumbled to a record low on Monday due to concerns over the stability of the UK's financial position. It followed a strong decline last Friday, which occurred because of the widespread demand for the dollar in the context of the global crisis and geopolitical tensions, as well as the new UK Treasury Chief Kwasi Kwarteng's announcement that the government will implement the biggest tax cut in 50 years while increasing government borrowing and spending despite high inflation.

The measures have raised expectations that the Bank of England may go for an emergency increase in the discount rate to strengthen market confidence and the national currency.

In addition to the problems mentioned above, the UK is facing weak economic statistics. Business activity in the manufacturing sector reportedly fell below 50 points, which is bad for the economy.

If the situation does not change, the pound will fall to parity with the dollar. Perhaps, there may be a local rebound in GBP/USD, but the main trend will be downward until the Bank of England decides on a sharp increase in rates.

Forecasts for today:

Exchange Rates 27.09.2022 analysis
Exchange Rates 27.09.2022 analysis

USD/CAD

The pair is trading below the support level of 1.3675. A decrease in negative sentiment, local rebound in stock indices and strong rise in oil prices may prompt a further fall to 1.3575.

USD/JPY

The pair faced resistance at 144.80. But if market sentiment improves, it will bounce back to 143.15.

 

Relevance up to 08:00 2022-09-29 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Read more: https://www.instaforex.eu/forex_analysis/322744

Bank of England survey highlights easing price pressures

InstaForex Analysis

Instant Trading EU Ltd. is the CFD broker operating under the brand instaforex.eu, regulated by CySec with license number 266/15.

Besides CySEC, Instant Trading EU Ltd. is also supervised by the Czech National Bank (CNB), the Slovak National Bank (SNB), and the Polish Financial Supervision Authority (KNF). InstaForex.eu has branches in the Czech Republic, Slovakia, and Poland, where it provides support in local languages. InstaForex.eu is a member of the Investor Compensation Fund (I.C.F) which is an additional security for the client's funds.

InstaForex.eu offers access to around 2,500 instruments (CFDs in Stocks, ETFs, Indices, Commodities, Forex, Cryptocurrencies, US Synthetic Stocks) and the MT4 and MT5 platforms,trading accounts in EUR, USD, PLN, CZK, GBP.

More information at: www.instaforex.eu

 

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69.82%. of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.