Euro showed very minimal movement on Tuesday, continuing the sideways trend. Most likely, the reason is the dovish stance of the Federal Reserve System and the European Central Bank, which is forcing investors to take a wait-and-see attitude in the market. Obviously, new benchmarks are needed, as the data released this week are clearly not enough to set off large movements.

At the same time, World Bank released its economic projections for 2021 and 2022, which indicated that emerging and developing countries will continue to grapple with the COVID-19 pandemic and its aftermath. This will happen despite the fact that several large economies are driving the strongest global growth ever recorded.

World Bank estimates that global GDP will grow 5.6% this year, up from the 4.1% forecast in January. The impetus is the stronger-than-expected recovery in both US and China. Latest data said the two grew 6.8% and 8.5%, respectively.

In 2022, most developed countries are projected to return to their previous per capita income levels, while two-thirds of the emerging countries will remain below pre-crisis levels. Nevertheless, economic growth in low-income countries will be the second-highest in 20 years, at approximately 3.4%.

That being said, world GDP will climb by 4.3% in 2022, and then by 3.1% in 2023. EU GDP, meanwhile, will grow by 4.2% in 2021.

As for global inflation, it will rise by only 1% in 2021 because growth will be held back by countries whose economies are yet to recover from the COVID-19 crisis. Long-term expectations also point to continued low and stable inflation.

With regards to trade deficit, US observed a sharp reduction in April, from $ 75.0 billion to $ 68.9 billion. The main reason is the jump in exports by 1.1% to $ 205.0 billion, while imports fell 1.4% to $ 273.9 billion.

Considering this, economist Brian Sack said the Federal Reserve should begin cutting back its bond purchases to prevent an overheated economy. He said a further increase in inflation will make it difficult for the Fed to achieve stable prices and maximum employment.

As above, euro remained in a sideways channel, but today, large movements could occur if buyers manage to push the quote above the 22nd figure. Doing this will lead to a jump towards 1.2225 and 1.2250, while a drop below 1.2155 will result in a decline towards 1.2210 and 1.2070.

GBP

Like euro, pound traded sideways yesterday, partly due to the statements of Bank of England Chief Economist Andy Haldane. He said the uncertainty in the labor market remains "acute", so the central bank will not ease its bond purchases yet.

As for today's meeting over trade issues between UK and EU, Press Secretary Jen Psaki said the UK government does not expect the EU to change its approach on the Northern Ireland protocol, so there is no need to make any changes to the current situation.

Going back to pound, a lot depends on 1.4125 today because a drop below it will set off a massive plunge to 1.4085 and 1.4040. Meanwhile, a break above 1.4190 will lead to a jump towards 1.4240, which is the upper border of the current sideways channel.