Yesterday's decision of the Bank of England led to a decrease in the pound, but then buyers returned to the market amid statements made following a meeting in Brussels by representatives of the UK and the EU.

Great Britain

As indicated in the minutes of the meeting of the Bank of England, in February, it was decided to maintain the key rate at the level of 0.75%. This decision was made at a ratio of votes of 9 to 0, that is, unanimously, which fully coincided with the expectations of economists.

Pressure on the pound was formed after the regulator revised its forecasts for economic growth rates. It is expected that UK GDP growth in the 4th quarter of 2018 will be at the level of 0.3%, and in the 1st quarter of 2019, it will slow to 0.2%.

A total of 2019, the Bank of England predicts UK GDP growth to 1.2%, from 1.7%, which was previously expected. For 2020, the Bank of England lowered its forecast for UK GDP growth to 1.5% from 1.7%.

The statement noted a sharper and more steady slowdown in global economic growth. One of the main reasons for the slowdown in the UK economy is the decline in global economic growth due to the tightening of central bank policies and trade tensions.

Despite all these factors, the English regulator still sees the need to raise the key interest rate in the coming years.

The British pound was supported by the UK and the EU. Following the meeting in Brussels, European Commission President Jean-Claude Juncker stated that he was open to adding language to the political declaration regarding the content of the terms of a future agreement. This suggests that the probability of extending the UK exit from the EU is very high. But one should not forget that the political declaration is only of an advisory nature, and it will not affect the vote in parliament.

May and Juncker will meet again this month.

The statements made by the Governor of the Bank of England during the press conference were mainly focused on the situation with Brexit. Mark Carney noted that the UK economy is not ready for Brexit without a transitional period, and Brexit without an agreement will only increase the risk of recession in the UK in the coming years.

As for the technical picture of the GBP / USD currency pair, the chart shows how buyers are trying to reverse the downward trend formed since the end of January of this year. Support is provided by the level of 1.2920, return under which can only increase pressure on the British pound. However, while trading is conducted over this range, one can count on a breakthrough of resistance at 1.2990, with access to fresh highs of 1.3050 and 1.3100.

USA

Yesterday's data on the US labor market remained unaddressed by traders. According to a report by the US Department of Labor, the number of Americans who first applied for unemployment benefits has decreased. So, for the week from January 27 to February 2, the number of applications fell by 19,000 and totaled 234,000. Economists had expected that the number of applications last week would be 225,000.

Fed spokesman Robert Kaplan once again spoke yesterday, who reiterated that the Fed should be patient about rates. Kaplan also noted that fiscal stimulus, which supported the American economy last year, no longer brings the desired result, and new and effective tools to stimulate growth are currently required.

As for the technical picture of the EUR / USD currency pair, yesterday's profit taking was the first signal for the likely formation of an upward correction in the euro. However, to confirm this, buyers need to return and consolidate above the resistance of 1.1365, which will lead to a larger increase in risky assets in the area of highs of 1.1400 and 1.1435.