Forex Signals Brief Feb 6: A Dovish BOE Rate Cut Could Send the GDP Plunging!
Today the Bank of England is expected to cut interest rates, and if they sound increasingly dovish, chances are the GBP will dive hard.
Today’s Market Expectations
The Bank of England (BoE) is expected to cut interest rates by 25 basis points, bringing the Bank Rate down to 4.5%, with a 7-2 vote split anticipated. In its previous meeting, the BoE held rates steady, but the vote split was more dovish than expected, with three policymakers favoring a rate cut, compared to just one in prior meetings.
Markets expect three rate cuts this year, but some policymakers are leaning toward four. Despite UK PMIs reaching a three-month high, underlying economic concerns persist. The S&P Global report highlights rising layoffs and renewed price pressures, raising stagflation risks. Although output has improved slightly, the economy remains stagnant with downside risks still in play.
US Labor Market & Gold Surge
The US Jobless Claims report remains a key focus, as it provides a real-time snapshot of labor market conditions. While there has been some easing in claims, continuing claims remain near cycle highs, and initial claims have remained in the 200K–260K range since 2022.
- Last week’s Continuing Claims: Declined from 1,900K to 1,858K.
- Initial Claims Forecast: Expected at 215K vs. 207K prior.
The sentiment remained positive again yesterday after the freezing of tariffs on Mexico and Canada on Monday, while stock markets and risk currencies saw strong buying momentum, leading to a volatile but ultimately weaker U.S. dollar. Across 26 forex trades, we secured 19 wins and 7 losses, maintaining a predominantly long stance on equities and gold.
Nothing Can Stop the Gold Rush
Meanwhile, GOLD extended its rally to a new all-time high of $2,798.40, surpassing its previous peak of $2,790. With strong bullish momentum, the $2,800 level could soon be breached, and a move toward $3,000 is possible. Global economic and political uncertainties continue to support gold’s appeal as a safe-haven asset. Recent US GDP data also provided additional support for XAU/USD, helping it sustain its breakout. Despite intraday volatility, gold briefly fell to $2,772 before rebounding strongly to $2,830, highlighting ongoing market momentum.
XAU/USD – H4 Chart
USD/CAD Decline Slows
In the forex market, USD/CAD experienced significant swings following the weekend tariff news. The pair opened with a two-cent gap higher, initially surging to a 20-year high of 1.4793 after Trump’s tariff announcement. However, after Trump and Trudeau’s call, which was described as having gone “very well”, the Canadian dollar strengthened, causing USD/CAD to retreat to 1.44.
USD/CAD – Daily Chart
Cryptocurrency Update
Bitcoin Continues to Slip Lower
The crypto market remained volatile, with Bitcoin initially dropping to $91,500 following Trump’s tariff announcement. However, BTC rebounded to $100,000 and formed a hammer candlestick, hinting at a possible bullish reversal. Despite this, Bitcoin failed to sustain gains, falling below $100,000 once again yesterday. Ethereum displayed a slightly different trajectory than Bitcoin.
BTC/USD – Daily chart
Ethereum Snaps A Small Gain
ETH/USD initially dipped toward $2,100 on Monday after the flash crash, testing key support near $2,000, but managed a strong recovery toward $2,900. The formation of a pin candlestick suggests potential upward momentum, which didn’t materialize on Tuesday, but it did yesterday, as Ethereum’s resilience stood out as ETH gained while BTC struggled.
ETH/USD – Daily Chart
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