FX.co ★ GBP/USD. An important day for the GBP: Bank of England meeting will be held today

The GBP/USD pair froze in the flat, waiting for increased volatility. Today, the Bank of England's next meeting will take place, as a result of which the instrument will either pull up or test the borders of the 1.37 mark again.

In turn, the US dollar became hopeless: the controversial rhetoric of Treasury Secretary Janet Yellen, who unexpectedly decided to speculate about the monetary policy prospects, initially inspired dollar bulls, but then disappointed them. In just one day, Yellen made essentially opposite statements. First, she said that the Fed may have to raise interest rates, thereby preventing the economy from overheating. However, she then refuted her own words, saying that she does not expect a tightening of monetary policy. At the same time, the US Treasury Secretary added that she does not have the right to voice any recommendations to the Fed.

One can speculate for a long time about the reasons for this incident, but the fact remains that the head of the US Treasury did not insist on tightening the parameters of monetary policy. Reacting to Yellen's words, some Fed members reminded traders once again of their commitment to accommodative policy.

In particular, CEO of Federal Reserve Bank of Boston, Eric Rosengren, said yesterday that it is too early to talk about curtailing QE and even more so, raising the interest rate. In his opinion, the inflationary growth will be temporary, while the labor market will reach the level of full employment no earlier than the second half of next year. At the same time, he was skeptical that inflation could "become a problem" for the US economy. A similar thought was voiced yesterday by the President of the Federal Reserve Bank of Cleveland, Loretta Mester. In her opinion, this year's expected inflation growth will not be "the steady increase that meets the Fed's requirements for tightening monetary policy." She also expressed quite an interesting idea – according to her, the Fed will not respond to strong labor market indicators without inflationary pressure. In other words, Mester believes that strong employment should go hand in hand with strong inflation. It is worth noting that Nonfarm data for April will be published tomorrow, which should reflect the decline in unemployment to 5.8%. But against the background of the above position of Mester, there will be no reaction to the release from the market.

Thus, the Federal Reserve members were quick to refute the "hawkish" intentions of the regulator, and Janet Yellen herself took back her words, reacting to the provoked volatility. This means that the actions of the GBP/USD pair will be free. Today's behavior of this instrument will entirely depend on the result of the Bank of England's May meeting.

It should be noted that the UK has released quite strong macroeconomic reports over the past few weeks, which indicate the recovery of the national economy. The week before last, we learned the February data on the labor market – unemployment showed a decline even during the strict lockdown. On the contrary, the level of average earnings is consistently growing. Inflation is showing weakness, but still growing. In particular, the main consumer price index recovered to the level of 1.1%. Traders were also pleased with the retail sales data in the UK. So, the March indicators came out in the "green zone", updating the annual high.

Such results allow us to count on the toughening of the rhetoric of the members of the English regulator, although the latest speeches from the Bank of England's representatives signal that the Central Bank will ignore the releases of recent weeks, while maintaining a cautious position. In particular, the representative of the Central Bank, Silvana Tenreyro, recently reacted skeptically to the growth of inflation indicators, emphasizing that "it is important to distinguish between a steady increase in inflation and temporary volatility." A similar position was voiced by some other representatives of the British Central Bank. For example, Gertjan Vliege has repeatedly stated that the rate should not be related to the short-term state of the economy.

In my opinion, the Bank of England will make it clear today that the British regulator is still too far from tightening the parameters of monetary policy. This fact may exert significant pressure on the pound, especially amid fairly strong macroeconomic reports, large-scale vaccination campaign and the weakening of quarantine restrictions. All these factors contribute to the strengthening of "hawkish" expectations, but the British regulator may not rush to such conclusions.

From the point of view of technical analysis, the situation is uncertain. The GBP/USD pair on the daily time frame is located in the Kumo cloud, near the BB midline. At the same time, trend indicators are not moving, reflecting the indecision of both buyers and sellers of the pair. The downward target is the support level of 1.3800 – this is the lower border of the Kumo cloud. During the past three weeks, the GBP/USD bears have tried to go lower several times, but they failed. Therefore, this level acts as a reliable price level. In order to reach it, strong information news is necessary. In my opinion, if the Bank of England does not justify the "hawkish" hopes of the market today, the pound will limit itself to a 100-point decline to the base of the 1.38 mark.