Forex snapshot

David Madden looks at how upcoming economic data could affect the EUR/USD and GBP/USD pairs.

Pound regains lost ground

Sterling has pulled back some of the losses it incurred this week as traders await the US GDP report at 1.30pm (London time).

The pound is trading at $1.6728, up 0.1% on the day after mixture of short covering and bargain hunting helped sterling. The main focus of the day is the US gross domestic product report, and the consensus is for a decline of 0.6%. This will give a good indication of what the Federal Reserve will do next.

The pound has been in a downward trend versus the US dollar this week as softer-than-expected updates from the UK dragged on the pound. Bad weather in the US was blamed for the poor growth during the first three months of the year. A strong GDP report could see the pound head lower towards the $1.66 level; to the upside we could target the 100-hour moving average of $1.6804.

Spot FX GBP/USD chart

Euro higher ahead of US GDP

The euro is back above the $1.36 level, up 0.18% on the day as dealers look ahead to the GDP report from the US.

As I mentioned previously, the euro has been in a downward spiral versus the US dollar for the past three weeks, as there is speculation that the European Central Bank will introduce a stimulus package to tackle deflation in the eurozone.The euro is trading at $1.3615 as traders square up their books before the US reveals its preliminary GDP report, and analysts are expecting a decline of 0.6%. If the report is worse than expected we could target $1.3660, however a strong growth report could drive the euro to $1.3550.

Spot FX EUR/USD chart

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