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06.02.202600:44 Forex Analysis & Reviews: Meeting of the Bank of England. What Conclusions Do We Draw? Part 2

Relevance up to 14:00 UTC--5

Exchange Rates 06.02.2026 analysis

At the end of the first meeting of the current year, I also want to note that the Bank of England is not discarding further easing of monetary policy; however, it wants to ensure that its actions do not harm inflation. Over the past 18 months, the BoE has consistently lowered the rate, typically at each of its two meetings. The last policy easing occurred in December, so in February the central bank took a quite expected pause.

Bailey also noted that the British economy started the year more confidently than expected, which could potentially increase inflationary pressure. The first data from 2026 indicate stronger demand than we anticipated. As demand exceeds the BoE's forecasts, the Consumer Price Index may accelerate in the coming months, making a new round of easing impractical.

Therefore, as I mentioned earlier, the results of the MPC's February vote have no significance for future meetings. Rising inflation will make further easing impossible, even if the central bank had planned to lower the rate at every other meeting. Everything will depend on economic data. The BoE will continue to adhere to the principle of balancing between preventing the devaluation of citizens' incomes due to inflation and preventing a slowdown in economic growth.

Based on all of the above, inflation will continue to determine the BoE's monetary policy. What does this mean for the British, who experienced a real shock today due to the two extra votes? In my opinion, we will soon observe a scenario similar to that of three months ago. Let me remind you that at that time, the market was forming a corrective wave set as part of global wave 4. The market did not always have concrete reasons to lower demand for the British currency, but the wave structure pulled the pound down. And now, it is the wave structure that may pull the pound down.

When a clear three-wave structure is established, we can expect the correction to be complete. If the news background turns sharply against the U.S. dollar, we can expect the correction to be completed early. This week, the market was looking forward to the Nonfarm Payrolls report and the unemployment rate, but they will not be released. The publications have been postponed to a later date due to the "shutdown" in the U.S. If labor market data disappoints next week, it will already be a very good moment for completing the corrective structure.

Exchange Rates 06.02.2026 analysis

Wave analysis of EUR/USD:

Based on the conducted analysis of EUR/USD, the instrument continues to build the upward section of the trend. The policies of Donald Trump and the Fed's monetary policy remain significant factors in the long-term decline of the U.S. currency. The targets of the current trend section may extend to the 25th figure. At this moment, I believe that global wave 4 has completed its formation, so I expect further price increases. However, in the near future, I expect a downward wave (or series of waves), as the structure a-b-c-d-e also appears to be complete. In the near future, my readers can look for areas and levels for new purchases.

Exchange Rates 06.02.2026 analysis

Wave analysis of GBP/USD:

The wave pattern of the GBP/USD instrument looks quite clear. The five-wave upward structure has completed its formation, but global wave 5 may take on a much more extended appearance. I believe that in the near future, we may observe the formation of a corrective set of waves, after which the upward trend will resume. Therefore, in the coming weeks, I suggest looking for opportunities for new purchases. In my opinion, under Donald Trump, the British pound has a good chance of trading at $1.45-$1.50. Trump himself welcomes the decline of the dollar. All his actions have a double effect: a weaker dollar and the resolution of internal, external, trade, and geopolitical issues.

Key principles of my analysis:

  1. Wave structures should be simple and clear. Complex structures are difficult to interpret and often lead to changes.
  2. If there is no confidence in what is happening in the market, it is better not to enter it.
  3. There can never be 100% certainty in the direction of movement. Don't forget about protective Stop Loss orders.
  4. Wave analysis can be combined with other types of analysis and trading strategies.

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