19.06.202007:12 Forex Analysis & Reviews: Market is clearly looking for any reason to grow (there is a possibility of continuing the limited decline in GBP/USD and growth of USD/CAD)

The result of the meeting of the Bank of England on Thursday did not bring any special surprises, which, against the backdrop of investor's falling activity in the currency market, fits perfectly into the general outline of their behavior in the face of the probability of the risk of the second wave of the coronavirus pandemic spreading. The regulator left interest rates unchanged and expectedly expanded the incentive program from 645 to 725 billion pounds. However, the pound could not support these measures, as Brexit's issue came to the forefront again and the uncertainty surrounding the consequences of the prospect of a "divorce" of Great Britain and the EU accompanying it.

The problems of the new COVID-19 outbreak in China and in a number of States in America still forced market players to slow down and take a wait-and-see attitude. The main reason for this is the continuing probability of a new blow to the global economy, which, as many believe, will lead to a new closure of economies with all the ensuing consequences. And while this is unlikely, such expectations exist and guide the markets.

Why is there such a picture and why is there not a strong decline in the value of risky assets in the markets, while the dollar is strengthening as a safe haven currency?

The main reason lies in the fact that it is hardly worth expecting even in the event of worsening situation with the pandemic of new strict quarantine measures, primarily in the United States and China. Their introduction will simply kill the economies of countries that decide on these measures, and this will definitely serve as a catalyst for social unrest with all the ensuing negative consequences.

D. Trump, as well as the head of the US Treasury S. Mnuchin previously made it clear that such drastic measures in America should not be expected. This position of Washington, together with the existing uncertainty of whether the pandemic problems in the United States and China will develop into something serious or not, does not allow the dollar to receive support. This picture is the reason for the consolidation of currency pairs where the US dollar is present.

How long will it all last? It can be said with great certainty that activity in world markets will increase markedly only if the situation with the spread of coronavirus infection in China and the USA is clarified. If we manage to stop this problem with limited protective measures, as well as the advent of an effective vaccine against COVID-19, then we will witness a new multi-day rally in the stock markets, commodity and commodity assets, and, of course, in the currency market, where the US currency will definitely resume the downward trend.

Today, investors will also focus on the speech of Fed Chairman Powell, and a number of representatives of the US regulator.

Forecast of the day:

The GBP/USD pair broke out of the range 1.2480-1.2800 following the results of the meeting of the Bank of England and the concentration of market participants on the topic of Brexit. We believe that a price decline and its consolidation below the level of 1.2400 will lead to a further decline to 1.2300.

The USD/CAD pair is in the range 1.3500-1.3685. The recovery in crude oil prices and some improvement in market sentiment will allow the pair to rise to the upper boundary of this range.