This is a simple study of how interest rates influence the market.
I included 10 last values in my indicator. The base currency (GBP) is black. The second currency (USD) is red.
Between June and December, FED (USD) increased the interest rates 3 times by 0.250
BoE (GBP) also increased the interest rates by the same number but only once.
Obviously, this was a catalyst for a major bearish move. Not only that the rates difference had already been bearish at a time. The gap between the rates further increased! But look at the moment when BoE increased their rates. Even if insignificant for the long-term, it started a good counter-trend rally in the short-term.
In 2019, FED decreased the rate a few times, hence the difference changed a little in favor of GBP. At look how long the pair grew. It even smashed the previous highs until it resumed its downward trend based on the rate difference.
March 2020 was full of interest rate changes across all currencies. When BoE dropped the rate a little (in relative terms), FED decreased the dollar's interest rate rather drastically leading to a more than a year and a half long rally. Although it is losing its steam, it might yet continue for a while.
I created two indicators that can be used to study these relations and create a long-term vision once the rates change again (might take a moment to update). You can find them both in the public library :)
I included 10 last values in my indicator. The base currency (GBP) is black. The second currency (USD) is red.
Between June and December, FED (USD) increased the interest rates 3 times by 0.250
BoE (GBP) also increased the interest rates by the same number but only once.
Obviously, this was a catalyst for a major bearish move. Not only that the rates difference had already been bearish at a time. The gap between the rates further increased! But look at the moment when BoE increased their rates. Even if insignificant for the long-term, it started a good counter-trend rally in the short-term.
In 2019, FED decreased the rate a few times, hence the difference changed a little in favor of GBP. At look how long the pair grew. It even smashed the previous highs until it resumed its downward trend based on the rate difference.
March 2020 was full of interest rate changes across all currencies. When BoE dropped the rate a little (in relative terms), FED decreased the dollar's interest rate rather drastically leading to a more than a year and a half long rally. Although it is losing its steam, it might yet continue for a while.
I created two indicators that can be used to study these relations and create a long-term vision once the rates change again (might take a moment to update). You can find them both in the public library :)