Forex snapshot

The pound is trading higher on the back of last night’s Federal Reserve minutes and it has managed to hold onto its gains ahead of the Bank of England meeting.

Pound coin and dollar note
Source: Bloomberg

The euro received a nice boost from the Fed last night but can it keep up the momentum before Mario Draghi’s announcement?

GBP/USD awaits BoE meeting

The pound is trading at $1.6177. Sterling received a shot in the arm on the back of the Fed’s commitment to low interest rates for an extended period. However, traders are now looking to the BoE interest rate decision and statement at 12pm (London time). Mark Carney recently stated that interest rates in the UK will rise in the second half of 2015. If he reiterates that point today, the pound could hit $1.6240 with $1.6066 acting as support. If Mr Carney hints that interest rates will remain low for a prolonged period, it could drift back to $1.6.

Euro awaits Draghi’s speech

The euro is trading at $1.2776. The single currency has managed to extend its gains versus the US dollar this morning, and I suspect it has more to do with a short squeeze on the US dollar rather than euro strength. Mario Draghi is under even more pressure to turnaround the eurozone now that the Germany economy has hit the skids, and will speak in Washington DC at 4pm (London time).

The euro is eyeing $1.28 but any suggestions from Mr Draghi that additional easing is required could drive the currency to $1.2628.

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