Forex snapshot

The pound has pulled back ground versus the US dollar overnight, but is below the $1.66 mark for the fourth day in a row. The euro is back above the $1.32 mark after Germany posted reasonably good unemployment data.

Pound coin and dollar note
Source: Bloomberg

Sterling still below $1.66

The pound is trading at $1.6586. While it may have bucked its losing streak, the pressure is still on — the last trading day of the month is tomorrow and the pound has lost 1.7% versus the US dollar so far. The UK Confederation of British Industry's realised sales report is due out at 11am (London time). Analysts are expecting a reading of 27 for August, and the July figure was 21.

As Alastair McCaig stated, the US will report its preliminary second-quarter GDP at 1.30pm (London time). A strong report could drive the pound lower.

Sterling can’t rely on weak economic data from the US — the realised sales figures need to be good in order to trigger conviction buying. The $1.6687 level is acting as resistance, while the pound could target $1.6540 if the realised sales disappoint, or if the US GDP figures are good.

Euro back above $1.32

The euro is trading at $1.3209, a touch higher on the day after a number of eurozone nations revealed economic data that was mostly better than expected. This morning, Spanish CPI came in lower than expected but the German unemployment change actually showed an increase of 2000 in August.

The euro has failed to fill the gap up to $1.3242 on the back of Mario Draghi’s comments about the possibility of additional monetary easing. Tomorrow the eurozone will reveal CPI for the region.

Solid GDP figures from the US could push the euro to $1.3160 with $1.3242 acting as resistance.

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