2016-11-04 12:42:35

Yesterday, the Bank of England left interest rate unchanged. The Bank has also refused from the plan of the interest rate cut this year. Now it seems that both, the rise and the decline in the rate are possible.

The Bank of England has upgraded GDP growth forecast for the next year, lowered the forecast for 2018. According to the Bank of England, inflation may accelerate to 2.7% in 2017 and 2018, which is higher than previously expected. It seems that the Bank of England is considering the fall of the Pound as a temporal event; therefore too rapid return of the inflation to the target level may have a negative impact on the economy of the country.

British currency has grown yesterday after the decision of the High court in London that the government could start negotiations on the withdrawal from the EU only with the Parliament’s approval. The pair GBP/USD has soared up to the level of 1.2495. If the pair breaks through the level of 1.2500, upward movement may continue as a deep correction after the decline caused by Brexit in June.

According to the data released last week, British GDP in has grown by 0.5% in Q3, against the forecast of +0.3%. and by 2.3% on annual basis against the forecast of 2.1%. Thus, the British economy has got upward momentum, and the growth in Q3 was equivalent to the average growth over the past four quarters. Now, the country's GDP by 8.2% higher than the highs recorded before the global financial crisis.

Today, market participants are waiting for the data on the US labor market. At 15:30 nonfarm payroll will be released. It is expected that the number of new jobs outside agricultural sector will increase by 175 000. Unemployment rate may drop by 0.1% to 4.9%.

In case of the positive data the USD will strengthen in the markets and chances of the interest rate hike in December will increase. In case of the weak data the USD will significantly fall in the market especially amid the uncertainty about the outcome of the presidential election in the US, which will take place on November 8.