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

Relevance up to 13:00 UTC--5

Exchange Rates 06.02.2026 analysis

On Thursday, a meeting was held not only at the European Central Bank but also at the Bank of England. Unlike the European currency, the British pound came under market pressure after details of the meeting and the MPC committee's voting results on the rate were released. I want to say right away that there is not much difference in the margin by which the rate decision was made. The market expected the decision to be more unanimous but miscalculated. Nevertheless, the central bank made the decision that market participants had been expecting. As for future decisions by the British central bank, they will depend entirely on economic data. The fact that four governors voted for a rate cut today, rather than two (as the market expected), does not guarantee four "dovish" votes, let alone more, at the next meeting. Therefore, I believe that the market reacted too expressively, lowering the demand for the British pound.

However, it is worth noting that a fall in the pound is currently the most likely scenario. In my reviews, I regularly urge my readers not to get attached to global wave patterns. Wave analysis tends to change. It serves primarily to help market participants understand the current trend and what to expect next. In trading, it is best to rely on standard five-wave and three-wave structures. For example, we saw the formation of a clear and convincing impulsive five-wave structure. What can we expect next with a high degree of probability? The formation of three corrective waves, which we have been observing for two weeks. It is quite possible that if the wave structure indicated an instrument rise, we would not have seen a decline in the British pound today. But the corrective section of the trend pulls the pound down, especially if the news background formally supports such a scenario.

Let's return to the BoE meeting. As I already said, the decision to maintain the interest rate was made with a vote ratio of 5 to 4. Andrew Bailey cast the decisive vote. The Governor of the Bank of England stated that he expects a future reduction in borrowing costs if the projected decline in inflation in the coming months proves to be steady and unequivocal. "We need to ensure that inflation does not continue to rise as it did at the end of December," Bailey said. "That is why we decided today to keep the rate unchanged."

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.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Chin Zhao,
Analytical expert of InstaSpot
© 2007-2026
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