Forex snapshot

David Madden looks at how recent economic data has affected the EUR/USD and GBP/USD pairs.

Euro hit by German jobs report

The euro is off versus the US dollar after Germany revealed a worse than expected unemployment figures.

The euro is trading at $1.3618, down 0.1% after Germany announced that unemployment rose in April when analysts were expecting a decline. The disappointing jobless data is not the only economic update from the eurozone that misses expectations. French consumer spending and eurozone money supply both came in below the market consensus, making the possibility of monetary easing by the European Central Bank all the more likely.

The euro is near the low of today’s trading session, and we are not expecting any major economic announcements from the eurozone or US today. As I stated yesterday, the mounting pressure on the ECB could drive EUR/USD below the $1.36 level, and it would struggle to retake the high of $1.3660.

Spot FX EUR/USD chart

Pound dips below $1.68

Sterling is near a two-week low versus the US dollar as it extends its losses.

The pound is trading at £1.6770, down 0.2% as yesterday’s soft UK mortgage figures and strong economic updates from the US continue to resonate with traders. This morning the UK Confederation of British Industry revealed sales dropped to +16 in May, from +30 in April. This sudden drop in sales would take some of the pressure off the Mark Carney. Recently there has been speculation the Bank of England will increase interest rates in the first quarter of next year, and today’s report may suggest the British economy is not as stable as initially thought.

The soft sales figures today could push the pound below the recent low of $1.6740, and the next support level down would be $1.67. We may see some short covering which could push the pound to $1.68.

Spot FX GBP/USD chart

The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.

Find articles by analysts