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$1.56 continues to offer GBP/USD support

Bounces in both EUR/USD and GBP/USD ensure that rangebound trading remains.

Euro and US dollar notes
Source: Bloomberg

EUR/USD await PMI data

Spain was one of the few eurozone nations to see an improvement in its manufacturing PMI figures yesterday. This gave further credence to the worry that the eurozone, and more specifically the German economy, is creaking. Expectations for tomorrow’s services PMI figures are a little more optimistic with improvements expected across the board. Looking further down the week, we also have the next interest rate decision from the European Central Bank and we are highly unlikely to see any change here.

Once again the topic of discussion is: will the ECB embark on a European version of quantitative easing? The majority of eurozone countries would like to, but Germany still remains the lone voice of rejection. Unfortunately for the majority, the German voice is the most important.

As my colleague David Madden noted, a move back to the top of the range $1.2571 may be seen, and only a break and close above that area would see an end to the rangebound trading for EUR/USD.

Spot FX EUR/USD chart

GBP/USD traders await UK construction data

GBP/USD has once again found that yesterday’s dip below $1.56 was short lived as buyers quickly materialised. This morning’s UK construction figures are expected to remain high and ensure a stable morning for the GBP/USD.

This afternoon, on the other hand, could well see considerably more volatility in the currency markets as we will hear first from Stanley Fischer, followed by Janet Yellen, and then later Lael Brainard. All three voting members from the Federal Open Market Committee are of dovish persuasions. As this is the case, it is less likely we will hear anything that would rock the boat or move too far away from the message that Janet Yellen has been saying for some time.

Maybe later in the week the non-farm figures could be enough to break the range that GBP/USD has found itself in, but for the time being a gradual ascent back up to the top $1.58 is as much of a move as we are likely to see without some sizeable external announcement.

Spot FX GBP/USD chart

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