British pound jumps after the BOE interest rate decision

The British pound rose today after the Bank of England delivered its interest rate decision. As was widely expected, the committee members voted to leave rates unchanged at the current 0.25%. The members also agreed to leave the current £200 billion quantitative easing program intact. According to most analysts, the bank was not under pressure to tweak the asset purchases in this meeting. Instead, it will decide on whether to increase the purchases of gilts in the June meeting. In the accompanying statement, Governor Andrew Bailey said that the economy could shrink by 30% in the first half of the year. The bank also warned banks that their earnings will be under pressure especially if they refused to lend to companies.

The Australian dollar rose today as the market reacted to the new trade numbers from China. According to the trade office, the country’s exports expanded by 8.2% year on year after declining by 3.5% in March. The exports dropped by 15.2% in the first two months of the year. According to the office, this growth was mostly because of strong demand from South-East Asia. On the other hand, imports declined by 14.2% in April, year on year, mostly because airline manufacturers like Boeing and Airbus were not operating in the month. Also, low crude oil prices contributed to the slowdown in imports. At the same time, the country’s imports of iron ore and copper rose by 22% and 14% respectively.

The US dollar index declined slightly as the market reacted to the deteriorating labour market in the country. Data released today by the Labour Department showed that more than 3.1 million Americans signed for jobless claims in the past week. This brought the total number of Americans who have signed for these claims in the past seven weeks to more than 33 million. These numbers came a day after ADP reported that more than 20.9 million workers were removed from private payrolls in the first two weeks of April. Tomorrow, we will receive the nonfarm payroll numbers from the US, which are expected to show the damage caused to the economy.

EUR/USD

The EUR/USD pair was under pressure today as the market reacted to the jobless claims data. The pair is trading at 1.0786, which is slightly above the day’s low of 1.0778. The price is also finding support at the 23.6% Fibonacci retracement level. Therefore, a solid break below this level will mean that bears are in control, meaning they may attempt to test the previous low of 1.0750.

GBP/USD

The GBP/USD pair rose to a high of 1.2417 after the BOE interest rate decision. On the four-hour chart, the price is slightly below the 50-day and 25-day EMA and slightly above the 50-day EMA. Also, the price has found support at the trendline shown in pink below. Therefore, a move below this trendline will likely see the downward trend continue as bears attempt to test the support at 1.2090.

AUD/USD

The AUD/USD rose after the positive economic data from China. The pair rose from a low of 0.6377 to an intraday high of 0.6472. On the hourly chart, this price is slightly above the 38.2% Fibonacci retracement level. It is also above the 50-day and 25-day exponential moving average on the chart. Therefore, with the positive data from Australia and weak data from the US, there is a possibility the pair may attempt to retest the previous high of 0.6475.