Central Bank Week Results, OECD Forecasts and Pound Growth

20. Sept. 2019

Following the Fed, the Banks of Japan, Switzerland and England announced their decisions on the parameters of monetary policies. They keep interest rate steady. Accordingly, there were no large movements in the pound, yen and franc parities. Although it is worth noting some strengthening of the yen following the Bank of Japan decision.

Kuroda (the head of the Bank of Japan) noted that the Central Bank supports the expansion of monetary incentives. So the global trend towards easing monetary policies may continue.

Based on the results, our trading recommendations are unchanged. We will continue to sell the dollar primarily against the yen and the British pound. We will also sell the euro against the yen.

As for the pound, its fate will depend entirely on the outcome of the Brexit negotiations. We are still looking for a positive outcome, therefore, recommend buying the British pound. Moreover, yesterday the pound against the dollar rose to the highest levels since July 2019. This happened after the comments of the European Commission President Jean-Claude Juncker appeared that the Brexit deal could well be concluded before October 31.

in the light Gold purchases continue to be relevant. Concern among investors yesterday updated OECD forecasts on the world economic growth rates were added. The organization lowered its estimates to 2.9% from 3.2%. OECD also warned that exit without a deal would provoke a recession in the UK economy.

Speaking of the UK economy. Retail sales came out worse than expected -0.2% m/m (forecast was 0%). But once again we emphasize that the fate of the pound is now decided not by economic data, but by Brexit.

Yesterday, data on the real estate market in the United States was published and again the data significantly exceeded experts' forecasts: sales of existing homes in August increased by + 1.3% m/m (forecast was -0.7%).