Forex snapshot

Regardless of economic data releases, GBP/USD will be focused on how the Scottish polls are looking, while EUR/USD traders have the ZEW economic sentiment figures out this morning to preoccupy them.

GBP_USD_83383481
Source: Bloomberg

GBP/USD slows down

Last week’s rally in GBP/USD looks to have run out of steam as fears over the breakup of the union dominate thinking. Under normal circumstances the release of this morning’s UK inflation figures would garner the full focus of currency traders; today, however, is not a normal day, and almost everyone in the city will be keeping one eye on developments north of the boarder.

The release of results from this election are due to come in overnight on Thursday and into Friday morning. Either a ‘Yes’ or a ‘No’ will result in a strong market reaction. For the time being the sentiment remains bearish as the negatives are factored in.

Spot FX GBP/USD chart

EUR/USD awaits ZEW

Major decisions sit precariously in the balance with the long-term security of the union at risk – normally currency traders would assume we are talking about the EU, but for a change this focus has been shifted away from them.

This morning will see the release of the latest German ZEW economic sentiment figures, from which the eurozone could do with a welcome boost. However, the announcement of disappointing economic releases is becoming more than just a blip but a trend. The sentiment figures have steadily fallen since their January highs of 61.7 and the forecast for this morning is just 5.2.

For the time being risk for EUR/USD remains to the downside, with the last week’s worth of lateral movement having as much to do with focus being shifted elsewhere as it does to an improvement in the eurozone.

Spot FX EUR/USD chart

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