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The focus of today will mainly be on the pound, given the importance of the data this morning. Unemployment figures should continue to give the impression of a recovering economy, but it is the Bank of England (BoE) and Mark Carney that will be the main event.
Having kept quiet before the election, the BoE is now in a position to issue its outlook for the economy, and it is unlikely to be particularly positive. Given that austerity policies will remain in place, the bank has the room to keep monetary policy relatively loose, in order to give the economy the time it needs to reach full escape velocity. There is hardly much pressure to rush towards a normalisation of policy, given the elements of weakness in the UK and the problems of the eurozone.
GBP/USD one to watch today
With UK unemployment and the BoE inflation report up this morning, today would seem to be a day for watching sterling rather than trying to catch the moves. However, the upward trend of last week is still intact, with GBP/USD targets on the upside being $1.5710 and then $1.5792. A more dovish than expected BoE today could see recent gains given back, with a first target still being around $1.56 and then $1.5550.
EUR/USD to test yesterday's highs
A steady rising trend from the area around $1.1150 sees EUR/USD heading back towards yesterday’s highs around $1.1280, with a move above here targeting $1.13 and then $1.14. A move lower would run into support around $1.1150, and then to $1.1066.
AUD/USD favours sellers
Gains in AUD/USD have stalled around $0.80, with the possibility that we will now see a move back to the lows of the week around $0.79. A move back above $0.80 would head towards the 6 May peak above $0.8020, the drift back seems to suggest that the sellers may have the upper hand once again.
USD/JPY continues to slip
Having moved back below the ¥120 level and the descending trendline, it looks likely that this pair will move back towards Friday’s low at ¥119.60. A move through here heads back to ¥119.20, around the lows of last week.