CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
Established in 1974
Over 185,000 clients worldwide
15,000 markets worldwide

Greenback pulls back

A broad decline in the dollar helped GBP/USD and EUR/USD, but the MPC voting breakdown and Greek uncertainty could reverse the gains.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
GBP/USD
Source: Bloomberg

Sterling eyes MPC votes
The pound has been edging higher ahead of the MPC voting breakdown at 9.30am (London time). Awaiting the announcement, the market is expecting all nine members to vote in favour of keeping rates on hold and for the stimulus package to be kept unchanged at $375 billion, which will prompt short-term buying.

The chances of the voting breakdown coming in different to the expectations are low, but if it were to be different the bias it’s leaning towards is a vote in favour of lowering the interest rate.

As I previously stated, the UK inflation rate is at zero, but if you round it off to two decimal places it is in contraction, and this is cause for concern as the UK is teetering on deflation.

GBP/USD is receiving support at the 100-hour moving average (MA) at $1.4925, and the resistance at $1.50 will be the first target. If that is cleared, last week’s high of $1.5048 will be the next target. A drop below the 100-hour MA will bring $1.49 into sight and then the next level of support will be the $1.4855 area.

Euro creeps higher
Even though Greece’s debt repayments are looming the single currency is moving higher, but this is partially driven by a decline in the dollar.

As I previously commented, Athens has to make good on two repayments to the International Monetary Fund in the few next weeks. The political rhetoric of Greece hasn’t changed much, but the eurozone meeting on Friday will shed some light on the situation. The Syriza party came to power with the pledge to roll back austerity and renegotiate the country’s bailout package, but if they do buckle to their creditors, we could have a change of government in the coming months.

EUR/USD is receiving support from the 100-hour moving average of $1.0745. The resistance at $1.08 is the upside target, and a move through that mark will put $1.0848 (last week’s high) on the radar. To the downside, $1.07 is the initial target and a move below that will bring the 200-hour MA at $1.0680 into play, and if that metric is punctured $1.06 will be the next level to watch. 

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.