High volatility in the markets will continue in the foreseeable future

The European economy against the backdrop of strong post-crisis economic growth continues to demonstrate a slowdown in inflationary pressures, as well as a noticeable decline in business activity, consumer and business confidence.
Published Tuesday data on the import price index in Germany indicate that after a fairly significant surge last year, and then the same decline in the current rate continued to fall and, according to the information provided, for the first time since November 2016 moved to negative territory.
It was assumed that the price index for imports in Germany in annual terms will fall in February by 0.3% against the increase of the previous year by 0.7%, but it fell by 0.6%. The monthly value of the indicator also showed negative dynamics in February, having decreased by 0.6% with a 0.3% decline forecast and a 0.6% increase in January.
As for the British pound, it is also possible to speak about its probable local decline, if the arrangements for the UK's exit from the European Union slow down. While the expectation of an early resolution of Brexit supports an undervalued pound, and still high inflation stimulates hopes that the Bank of England will raise interest rates already at the May meeting.
In general, observing the world markets and for the currency one in particular, we can state the fact that uncertainty remains, which does not allow investors to concentrate and trade both for raising and lowering. We continue to believe that high volatility in the markets will continue.

M. Carney: The Bitcoin Has Failed

The bitcoin failed as a currency and is neither a way to preserve value nor a convenient way to buy things, said Mark Carney, the head of the British Central Bank.
According to him, it can be said that, to a great extent, the bitcoin has failed so far in terms of traditional aspects of money. It is not a means of preserving value because of its extraordinary volatility. No one uses it as a asset for goods exchange, said Carney to students at a London university.
However, crypto-technology that stands behind the bitcoin may still be useful as a way to verify financial transactions, Carney said, answering a question.
The head of the British Central Bank also said that in order to move as smoothly as possible to leaving the EU in March 2019, British regulators intend to give financial institutions the benefit of suspicion to the last minute.
The movements of the British pound are largely determined by speculation about the UK's leaving the EU's borders and how smooth this process will be.
According to Carney, everyone is focused on BREXIT. However, this is unlikely to be a difficult and legally binding process. Still, if 28 leaders unite for something that has a legal text related to it, what the exit agreement will be, then that will be good enough, said Carney.
Carney's comments became reality in a series of questions and answers, in a speech in which he called for financiers not to be motivated in their decisions, only driven by profits.

EUR/USD may fall to 1.04, and GBP/USD - to 1.20

The euro has risen to levels close to the psychological limit of 1.1500, but not all experts are convinced of further growth for the single currency.
The US dollar seems ready to shake off losses after Donald Trump's election victory, according to Amherst Pierpont.
The weak dollar may be ready to make a "U-turn" now that there are confirmations of interest rates rise.
Since the beginning of the year, the dollar has fallen by 8% against the euro and by 13% against the Mexican peso.
Analysts say, however, investors are starting to look beyond Washington for support for green money. The US currency should follow interest rates on government bonds that have risen.
In addition, the Fed is expected to begin to reduce its balance sheet, which in itself will cause a further rise in short-term interest rates and, accordingly, should make the dollar more expensive.
According to Amherst Pierpont's strategists, from now on we will see a return to the dollar-positive environment. They expect the dollar to rise by between 3 and 4% in general, the euro to move to 1.04 against the dollar and the pound to 1.20.

EUR/GBP - time to sell

Traders who traded the GBP were greatly surprised when British Prime Minister Teresa May announced that early elections will be held in the United Kingdom on June 8th. For some time, the Conservative Party has overriding the opposition, according to polls, so the prospect of them remaining in power continues to be up to date, and such a development of events will not have a particular weight on the markets. In the short term, additional information is needed to keep the pound rally.
EUR/USD also rose, on a par with the British currency, in part due to a weakening dollar.
In terms of technical analysis, in the currency pair, there is a breakthrough in the key support for a reversing "head and shoulders" figure, which has been developing for 9 months. We can look for short positions at the current price, putting a stop at 0.8460 and a target 0.7886.

JP Morgan: We must be careful with the pound as the bulls remain in control of the situation

The break of support around 1.2430/20 last week has a negative impact on the dynamics of the British currency, and now the pair found support near 1.2360, as analysts of JP Morgan advised to be careful.
In the bank warned that a break below 1.2316/00 will signal the return of the couple to a model of consolidation and the support moves to 1.2229 then the focus will be on 1.1988.
So far, the banking scenario is consolidation of the pair in the short term and new test of the resistance above 1.2631. The ability of the pound to overcome the last resistance is a sign of support for the Bulls, who hope for formation of bottom, as a way opens to test 1.2839 and then 1.3187.

Commerzbank maintains a bearish view on pounds

Commerzbank analysts believe that the short term outlook for the pound remains negative.
Last week, the pound failed to close above the short term resistance at 1.2579/81 (maximum of February 9), the negative forecast of analysts remains.
The pound is still not closed below 55- and 100-day moving average, but analysts believe that it will happen this week. Elliott waves are positive, but the market is facing 1.2640 and 1.2660. Below 1.2347 (minimum of February), attention will focus on the recent minimum of 1.2110. It is considered the last defense of 1.1988 - bottom-January.
Key short-term resistance is at 1.2640. Only break above 1.2707 most of February will enable expect further strengthening to the maximum since December - 1.2777. Between this level and 1.2836 lie several Fibonacci corrections and greater resistance and analysts suspect that the bulls will not go further.

The pound declined after the Brexit start

The pound fell against the dollar, after on Wednesday the British Prime Minister Teresa Mei formally launched the procedure for Britain's divorse with the European Union and began a two-year period of negotiations on the terms of Brexit, which will end in late March 2019. The pair GBP/USD fell by 0.12% to 1.2418. At the same time, the pound went up against the euro: the pair EUR/GBP fell by 0.14% to 0.8644.
On Wednesday the British Prime Minister Teresa May signed a letter that will officially launch Brexit. A letter with an official notification of Britain's invoke the 50th article of the Lisbon Treaty with the aim of exit from the European Union was delivered to the chairman of the European Council Donald Tusk.

Goldman Sachs: Investors have become more favorable for the euro

Currency strategists at Goldman Sachs have identified a change in the behavior of market participants amid recent signals and raising forecasts by the ECB and a warning that in the absence of deterioration in the nature of incoming data in the coming weeks, the rhetoric of central bank may become more confident.
At Goldman Sachs believe that the ECB is too optimistic in their forecasts for economic growth and inflation, there is potential for further adjustment of ECB policy.
Bank analysts believe that the recovery of the euro will be felt in the crosses (Fed factor is eliminated) and retain their quarterly forecast for EUR/GBP at 0.90 level and at the level of 127 for EUR/JPY.

GBP/USD: Expecting northern correction

To give a forecast on the behavior of GBP/USD in the upcoming week is quite difficult. And, despite the fact that more than 90% of the indicators point to the south, only 40% of experts support them. Most of them, along with graphic analysis on H4, took the side of the bulls, believing that the pair has already reached the local bottom and now it is waiting for the rebound to rise at least to the resistance zone 1.2250-1.2300. The next resistance is 1.2385. A support is seen at the level of 1.1985. Of the important events for this pair, the following should be noted: the possibility of starting the UK exit procedure on Tuesday, March 14, and the decision of the Bank of England on the interest rate on Thursday, March 16, which is likely to remain unchanged at 0.25%.

Natixis is awaiting fall of the pound to 1.18 in the coming months

Natixis publish its weekly review of the currencies of the G-10, draws attention to the fact that uncertainty about Brekzit will likely have a negative impact on economic growth in the UK, which will keep sterling under selling pressure.

Although GDP growth in the UK remains stable, uncertainty about the upcoming negotiations with the European Union is still very high, especially considering the rise of euroscepticism and the coincidence in time with the negotiation of a number of key elections.

For these reasons, analysts of the bank are cautious about prospects for economic growth in the UK in the medium term, recognizing the risk of stagflation. In the near time should be monitored CPI (looking to rise by 1.9% in January) and employment data. The bank remained wary of the pound, predicting a decline in GBP/USD towards 1.18 over the coming months. They expect EUR/GBP to vary between 0.84 and 0.86 in the near future.

Commerzbank recommends caution regarding the pound

Analysts at Commerzbank remain wary of pound, adding that the behaviour of the currency can be described as somewhere between neutral and negative.
GBP/USD broke through 55-day moving average, but could not close below support, which is located at 1.2429. Price movements can be interpreted as a slight twist, so attention is now fully justified. Last week, the market bounced off the top of the channel at 1.2702. Closing below 55-day moving average, opens the way for a fall to 1.2253, a minimum of 18 January.
The forecast of analysts from the bank remains neutral to negative. They suspect that prices will have to break through 1.2250 to relieve the current upward pressure and cause testing of minimums at 1.1988/80.

Consolidation of the US dollar

The US dollar remains under pressure despite modest gains against the euro and the yen. USD/JPY rose to 112.50 during the American session, but eventually again the couple was dragged down and fell below 112 before settling slightly above that level. The only data published in the US yesterday were the trade balance in December, which showed that the deficit rose to its highest level since 2012.
The British pound made growth that has wiped out any downturn in the day after comments by the Bank of England, according to which, based on the current trend of inflation the bank may increase interest rates.
As the euro traded at lower levels against the dollar and fell to 1.0650, at the end of the day the single currency managed to erase some of the losses and ended the day at 1.0682. The initial decline was driven by a decline in German industrial production, which fell by 3% in December while investors had expected an increase. Turmoil in Greece also contributed to the decline of the euro as a 10 year bonds jumped by 8%.

TDS sell the euro and the pound

Bank analysts at TDS have updated their forecasts and are now waiting for a raise in US interest rates twice this year and three times next year. The meeting of the FOMC on Wednesday will not be particularly interesting. In the first half of this week the trade likely will be in a range and from the bank prefer to buy the dollar on dips.
Yesterday's data on inflation in the eurozone showed significant growth, but the bank doubt that this will lead to an increase in nominal yields of European bonds (if this happens, then the real rate of return remains the main driver of the decline in EUR/USD). Acoording to TDS' analysts, it looks attractive to sell EUR/USD around 1.07 dollars.
As for the pound, political events may cause its further strengthening, but in the opinion of the bank, most of the news already have been calculated in prices, so analysts advise to sell in growth.

Goldman advised to use strengthening of the pound for sales

The pound has clearly demonstrated this week that is among the major currencies, analysts say. First, published on Saturday and Sunday article in the Sunday Times, which refer to confidential sources, said that British Prime Minister Theresa May in a statement categorically said that the country is out of the EU single market.
As a result of an increased risk of difficult Brexit, the pound fell. In reality, however, in her statement on Tuesday Theresa May said she wanted a soft option, stating that the procedure for the final vote for Brexit will be voted by parliament, and lack of access to the EU single market for goods and services will be replaced by new contract, the analyst added.

Lloyds Bank: In December EUR/GBP could fall to 0.83

In recent months, EUR / GBP is consolidating widely. Following the recent ECB decision to extend the quantitative easing program, while reducing the monthly volume and to expand the list of instruments suitable for the bank, the pair fell significantly. Then the pair resumed growth amid worsening of fears about tough Brekzit, analysts say. Currently EUR/GBP is trading significantly higher, they added.
According to the bank's analysts forecast for this year, the ECB and the Bank of England will not change interest rates, so the differential factor will have a serious impact on the pair. The main driving forces for its movement will become political events in Europe, elections in the Netherlands in March, in France in April-May, in Germany - probably in September and possibly Italy, analysts say. According to their forecasts, in December this year EUR/GBP will fall to 0.83.

Recommendations of UOB for the pound

The pound remains bearish with the potential for a possible test of 1.20, according to currency strategists at UOB. They say that the pound has been pushed down to the support at 1.2100 and reached 1.2038, having previously turned to growth, to test the strong resistance at 1.2250 (maximum 1.2273), analysts say.
The upward movement seems to be underway and while testing again 1.2270/75 will not cause surprise, the next major resistance at 1.2300 is likely to hold the attack of bulls, analysts say.
Earlier, the pound has broken through the strong support at 1.2085/90 (minimum 1.2038) but the downward movement was quickly replaced by recovery. While the level of 1.2290 remains intact, another wave down to 1.2000 can not be excluded, they added. Those who have short positions should consider partial profit taking near 1.2005/10, write experts.

The attractiveness of the British currency may rise

The dollar took a break again, going to the correction mode after Wednesday's rally. European currencies are trying to recover due to the increased interest in risk appetite following Wednesday's decision of OPEC to reduce production volumes, which triggered a 10% rally of oil prices.
Especially actively adjusted pair GBP/USD, which had reached a 3-week highs near 1.2660. After the breakdown of the upward movement of 1.26 quotes accelerated, and now the pound is trying to strengthen its position on the psychological level. The key growth driver for the British currency were the optimistic statements of the Minister of Brexit, which tried to weaken the market fears of a "hard Brexit". Players were particularly pleased with the comment that Britain can maintain access to the European single market after leaving EU. This is directly beneficial for the sterling as the British currency will return the attractiveness, shattered after the June referendum.
If we compare the EUR and the GBP, the position of pound look at this stage is much more stable. Status of the British economy, in spite of the "divorce" with the EU, so far eliminates the need for additional stimulus, and the negotiations themselves on an output from the block may last for quite a long period. The ECB, from the other hand, may be forced to extend the program of buying assets, especially in light of the increased political risk in the region.
However, the potential for further strengthening of GBP/USD looks limited due to the fundamental strength of the dollar. Today the US will publish key employment report, which is expected to increase jobs in the area of ​​170-180 (in my opinion higher than 200) thousand. If expectations are met, players will resume buying USD in anticipation of Fed rate increase at the next meeting.

Nomura expects growth of the pound

The reduction of short positions and the idea of ​​strengthening of the inflation caused rally of the pound. GBP regained the status of a reserve currency, but it does not reflect the hope that the UK can receive preferences in negotiations with the EU, analysts say. The pound should overtake other currencies in the short term as market attention is not drawn to negotiations for Brexit next year, they added.
Bank analysts expect the GBP/USD to reach 1.30 while EUR/GBP to fall to 0.84, while sales do not reach the threshold and did not give any other signal. The Supreme Court may decide that the reference to Article 50 of the Lisbon Treaty to initiate the procedure for leaving the country from the EU, requires the approval of parliament. But it is not excluded the Parliament to vote earlier and that they do not need a court decision, according to analysts.

BBH forecast that EUR/USD will go to 0.83 dollars, while GBP/USD - to 1.00 dollar or even lower

EUR/USD fell below the important support of 1.1040 dollars, this level has now become resistance.
The bank remains bearish long-term to the couple as according to them a further reduction could send the GBP/USD to parity or even below. This month, the single currency fell by 2.4 percent against the US dollar and increased by 2.8% against the British pound, and October can be the fifth consecutive month of growth of EUR/GBP (+ 12% since the beginning of Brexit). The length of this uptrend is comparable only to the period August 2012 - February 2013, when the couple grew seven consecutive months.
The recovery of EUR/USD from the declines in January was interrupted in the middle of last week with a break below 1.1040 dollars and now the pair descended to levels of late July, trading not far from achieved immediately after the British referendum drop around 1.0915 dollars, say analysts.
A break below this level could send the pair to test the support at 1.0800-20 dollars, and if EUR/GBP rise to 0.90 pounds, analysts expect GBP/USD to return to 1.20 dollars.
In the long term, analysts of the bank are in anticipation of reducing the EUR/USD to historic lows around 0.83 dollars, and the GBP/USD to fall below 1.00 dollar.

Scotiabank: GBP/USD entered the dead zone and does not give any signals

According to bank's analysts the short-term technical picture for the GBP/USD looks neutral and the pair seems to have entered a dead zone and does not give any signals.
However, it seems that correction up is exhausted and the Bank remain long-term bearish.
Repeated testing this week on the support of 1.2255-60 dollars seems a key area that could determine the fate of the dynamics of the GBP/USD in near future, they added.
If the pair hold above this level, it is entirely possible that it would test the area of 1.23 dollars. Otherwise, it is expected the pair to fall below 1.2250 dollars, which make the picture bearish.