Market Watch review. 19.02.2021

In today's release, we’ll cover the following topics:

• General strengthening of GBP. 
• Growth of oil prices. 
• Bitcoin sets a new record. 
• Report on the labor market in the United States. 

On Thursday, we saw a general strengthening of the British currency against the background of vaccination successes in foggy Albion. Let me remind you that Great Britain is leading by a large margin in the number of vaccinated population among all European countries. As a result, the likelihood of a significant reduction in quarantine restrictions and a subsequent increase in the rate of recovery of the British economy is growing. 

The Bank of England is also quite optimistic about the prospect of economic recovery, which contributed to the strengthening of GBP against most currencies. Thus, the EUR/GBP currency pair updated its lows since March 2020, while GBP/JPY pair approached the December 2019 high. At the same time, the risk of a correctional weakening of the British currency remains high.

Shifting to the US trading session, I will note the deterioration of weather conditions in the US, thereby limiting the production of "black gold". Also in Russia, there are some difficulties with the transportation of oil due to the abnormally cold weather. Despite all this, the activity of buyers in the oil market has significantly decreased, which can largely be due to profit-taking on previously opened long positions.

But for oil traders, it is important to take into account the fact that the rapid growth of oil prices significantly reduces the need for such a strict restriction in the production and sale of oil by OPEC and its allies, which can also lead to a medium-term decline in oil prices from the 13-month highs reached. Therefore, active market purchases become more risky.

And now let's shift to the cryptocurrency market for a while. Bitcoin has been updating its maximum almost every day this week and, as a consequence, has crossed the incredible $50,000 mark. The reason for the rapid growth remains the massive interest in this asset among institutional investors, who manage portfolios worth trillions of dollars. At the same time we should not forget about high volatility of the asset and, as a consequence, about the risk of development of deep corrective decreases

In conclusion I would like to note the published report on the changes in the number of initial and repeated applications for unemployment benefits in the USA. The actual data turned out to be worse than previous and forecasted values, thereby pointing to the prospect of slower recovery of the US economy and, consequently, to a very low probability of the Fed's transition to a stricter monetary policy in the next few quarters. 

Closely monitor the news background and be prepared for all the surprises of the market.