Technical analysis and trading recommendations - https://fxpcm.com/en/fx/gbpusd-after-bank-englands-decision-and-anticipation-nfp-05082016
After a referendum on Brexit happened slowdown in the UK economy and the Bank of England on Thursday made the most serious in the history of decline in the forecast for economic growth next year. The Bank of England expects economic growth of only 0.8% in 2017 against 2.3% previously expected.
As expected, the Bank of England on Thursday lowered its key interest rate to a record low of 0.25%. This was the first decrease in rates since 2009. The interest rate has reached its lowest level in three centuries. Also, the central bank to buy government bonds in the UK involves the sum of 60 billion pounds and corporate bonds in the amount of 10 billion pounds, as well as to give commercial banks cheap loans in the four-year framework of a new model-term financing.
In response to the bank's decision to the yield on 10-year government bonds the UK fell to a record 0.644%, but then recovered somewhat. Stronger than all the world's stock indices rose yesterday, the British FTSE100, jumped by 1.6% and a decrease having beaten the previous 6 sessions.
GBP / USD pair closed Thursday with a decrease of 1.7% at the level close to the level of 1.3100. The pound also weakened against most currencies competitors.
Today there is some recovery of the pair GBP / USD, however, the pound remained under pressure.
Investors' attention today will be focused on the release of the report on the US labor market in July, which is published in the 15:30 (GMT + 3). In general, expected positive data. It is assumed that the number of new jobs created is with / agricultural sector of the US economy (Non-Farm Payrolls) in July was 180,000, and the unemployment rate decreased by 0.1% to 4.8%. Labor market data will provide insight on the possible timing of interest rate increases by the Federal Reserve System.
This will directly affect the position of the US dollar and the dynamics of the US stock indices in the short and medium term. Positive data revived hopes of market participants that put on the rising dollar on the next imminent rate hike. Negative data will cause a further decline of the US dollar in the financial market.