Trading Plan for February 7

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Let’s consider the economic calendar. Today at 14:00 MT time we await the monetary policy summary by the Bank of England. The meeting will be followed by the release of the inflation report. The bank is expected to keep its interest rate on hold, however, the tone of the statement may affect the British pound, which is suffering due to the Brexit uncertainties. In addition, at 14:30 MT time there will be a speech by the BOE governor Mark Carney.

As the news on the possible delay of the next Brexit vote keeps circulating, the Bank of England may support the GBP today.

Also today at 16:30 MT time the FOMC member Richard Clarida will make his speech about the neutral interest rate at the Czech National Bank conference. His comments may affect the USD performance.

Now let’s look at the chart of GBP/USD. We see, that the pair created the extremum near the 1.3110 and started to fall. The current trend for the pair is bearish.

On the H4, we can see that the pair has been targeting the support at 1.2870, which is placed close to the 200-MA. The next support lies at 1.2840. If the BOE is hawkish, the pair will rise to the resistance at 1.2941. If this level is broken, the next resistance lies at 1.2973. The RSI has entered the oversold zone. If it leaves this zone, this may signal a possible reversal.

Now let’s look at the daily chart of EUR/USD. The pair has been declining since the beginning of the week amid the strong US dollar. Yesterday it fell below the 50-day MA. On the H4, the pair has been moving down to the support at 1.1344. If the USD is supported by the comments of the FOMC member, it will break this level and fall towards the next support at 1.1329. If there are more comments on the neutral path of the Fed, the pair will have a chance to rise towards the resistance at 1.1372. The next resistance is placed at 1.1392. Here, RSI has also entered the oversold zone below the 30 level. If it crosses this level, this may provide an opportunity to open long position. However, wait for other confirmations before doing this step.