Pound draws interesting candlestick pattern

02/03/2023

1 minute read

2023.02.03 10:03

On Friday sees little change in the British pound after falling 1.2% the day before. At 1.2210 during the European session, it is trading.

This week, major announcements from the central bank, such as the and rate decisions, have been in the news. After the Fed’s decision, GBP/USD rose 0.43 percent, which represented modest gains. Even though Fed Chair Powell warned that rates would remain high and that the fight against inflation was far from over, investors appreciated what they heard.

Even though Powell stated yesterday that he does not anticipate cutting rates this year, the markets anticipate that inflation will fall faster than the Fed anticipates and that there will be some rate cuts this year. Powell did acknowledge that disinflation had begun, which contributed to the dollar’s overall decline and elevated risk sentiment.

Following the BoE’s second consecutive rate increase of 50 basis points, the pound experienced a sharp decline. Markets cheered Governor Baile’s dovish remarks, which stated that the economy had turned a corner and noted that members had removed the word “forcefully” from its forward guidance statement. Investors ignored Bailey’s warning that inflation risks were tilted upward and that inflation pressures remained.

The Fed’s focus on the strength of the labor market, in addition to inflation, suggests that today’s US job report could move the market. decreased from 256,000 to 223,000 in December, and it is anticipated that the decline will continue, with an estimated 190,000 for January.

This week’s employment releases have been mixed due to the fact that the payroll report showed a decline in December but that unemployment claims and JOLT job openings both moved higher. The unemployment rate and hourly earnings will also be closely watched by the markets.