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Forex snapshot

The euro is still edging lower against the US dollar as the wheels continue to come off the single currency. Meanwhile, sterling is offside yet again as traders have little reason to buy the battered pound.

Euro and dollar currency
Source: Bloomberg

Euro is subdued

The euro is trading at $1.2751. It is just off a two-year low and is showing no signs of recovering this morning. Germany consumer climate figures dropped in September to 8.3 from 8.6 in August, further proof that the strongest economy in the currency area is suffering. We are not expecting any major economic announcements from the eurozone today. Traders will be focused on the final reading of US GDP at 1.30pm (London time). The consensus is for a reading of 4.6%. Keep in mind however, that we have been surprised by US growth in the past even when other indicators appeared to be robust.

The euro is encountering resistance at $1.2811. Strong growth numbers from the US could ramp up speculation about interest rates rising sooner than expected, which may drive the euro below the $1.27 mark.

EUR/USD chart

Sterling hovers above $1.6302

The pound is trading at $1.6314 and has been dancing around the $1.63 level all morning. We are not excepting economic announcements from the UK today, in which case traders will have to rely on weak numbers from the US in order buy the pound, and given the recent run of good economic announcements from the US I wouldn’t count on it.

Not only do we have growth figures from the US today, but we also have the University of Michigan consumer sentiment at 2.55pm (London time). Traders are expecting a reading of 85.1, and robust figures from the US could drive the pound to $1.6223.

GBP/USD chart

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