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Forex snapshot

 EUR/USD creeps back above $1.28 while GBP/USD looks to be threatening the $1.62 level.

Counting out dollar and euro notes
Source: Bloomberg

EUR/USD eyes 50-DMA

Today’s economic calendar is a little on the thin side, but arguably an absence of European data is a good thing as it has tended to be negative. Although not whole heartedly convincing, EUR/USD has spent most of October heading higher and is once again not far off its 50-day moving average.

Overnight China has posted better-than-expected GDP figures which should keep equity traders happy, and avoid any undue negativity spreading to the currency markets. The sovereign debt market also looks to have calmed down albeit without the Greek ten-year debt falling back below the 7% level.

The first target on the horizon for EUR/USD is the $1.2850 50-day moving average and then more optimistically the $1.30 level.

EUR/USD chart

GBP/USD awaits MPC voting

There is limited economic data out today on either the UK or the US and as such we could see a calmer, less range-bound trading day. That of course could well be the calm before the storm as tomorrow will see the release of the Monetary Policy Committee's official bank rate voting.

The UK economic data might continue to point towards recovery but it is unlikely that the voting members will not have taken notice of the events in the eurozone. With the eurozone remaining as the biggest trading partner for the UK, it is almost certain that we will feel the effects albeit in a slightly lagging form.

The selloff in GBP/USD looks in the short-term overdone, but tomorrow's MPC voting could well see the calm market burst back into life. Efforts to trade above $1.62 have been short-lived and this looks to remain the case.

GBP/USD chart

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