Home > Daily Market Recap for Thursday 4th February: Bank of England set for Monetary Policy Decision

Daily Market Recap for Thursday 4th February: Bank of England set for Monetary Policy Decision

The equity markets remain bid so far during the NFP week as the Dow Jones in the United States still hovers around all-time highs. The Dax index in Germany does the same, as European equities follow the price action in the United States closely. 

On the commodities front, the bullish run in the prices of oil continues. Yesterday’s OPEC meeting did not change the bullish trend, as the price of oil trades in anticipation of faster than expected economic recovery due to increasing vaccination rates in the advanced economies.

Daily Analysis

Today all eyes are on the Bank of England (BOE) and its decision in a few hours from now. The British Pound (GBP) started the day with a bearish tone, but that may change once headlines from the Monetary Policy Committee (MPC) hit the wires.

While no changes are expected, the focus is on the BOE’s forecast, forward guidance, and the outcome of its study on negative rates. Other than that, the economic calendar in the United States is quite thin today, with only the initial jobless claims due to be released.

Markets to Watch

Due to the BOE, the GBP pairs should experience increased volatility today. Out of them, the GBPUSD looks particularly interesting because of a rising wedge formation. Besides the GBPUSD, the decline in Euro pairs (EURUSD and EURJPY) may pick up further steam today due to the strong rise in inflation reported yesterday.


The GBPUSD formed a rising wedge on the back of a bearish divergence with the RSI right before the MPC’s decision today. While this is a bearish reversal pattern, it often acts as a continuation one when part of a complex correction as described by the Elliott Waves Theory. As long as the market does not make a new high, the bearish bias should persist as the dollar rallies across the board.


EURUSD finally cracked the 1.20 level and, curiously enough, did not find many stops aligned below – at least so far. The pressure on the pair mounts because of the inflation reaching five-year highs yesterday. The problem with it is that no one expects for the ECB to react, and thus higher inflation weighs on the currency.


The EURJPY cross was rejected twice above the 127 level and, since the second attempt, it moved sharply lower. We may discuss here a double top formation, albeit it is too early to tell. A double top takes the shape of the letter M, and it should break the neckline (i.e., the blue horizontal line), and only after that the measured move starts. All in all, if this is a double top, the pair’s target to the downside is far lower, further confirming the pressures on the Euro pairs.

Winners and Losers

The EURUSD remains the main actor on the currency market today as well. Typically, the main currency pair of the dashboard should have a mixed performance during the NFP week. This time, it appears that both the inflation data mentioned earlier and the stronger than expected ADP (private payrolls) numbers released yesterday weigh on the pair.

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