Forex snapshot

GBP/USD’s correction is as much a lateral move as it is a retracement, while the European Central Bank must be hopeful that the weakness the euro has had against the US dollar continues.

A pound on top of a US dollar note
Source: Bloomberg

Markets wait to hear from FOMC and MPC

This morning’s poor industrial and manufacturing figures for the UK have done little to push the GBP/USD rate any higher. The last couple of weeks have seen the rate drift lower at a very sedate pace. Although questions are now beginning to be asked about the likely timeline for the US to start raising their interest rate, it still looks likely that the UK will be the first to show its hand.

The next big driving forces will be Wednesday evening's Federal Open Market Committee minutes and Thursday morning's Monetary Policy Committee rate statement. As my colleague David Madden stated it could well be central bank comments that ultimately trigger another leg higher.

EUR/USD improves but still below key level

The ECB president Mario Draghi will be speaking on Wednesday evening at a lecture in London, and it is unlikely he will waste such an opportunity to talk down the strength of the euro. EUR/USD is below the key $1.3600 level, but in a far from convincing manner and still some way away from the intraday low of $1.3505 that it hit last month when the ECB first announced the latest measures to tackle low inflation and stumbling eurozone recovery.

Although we are hearing more commentary out of the eurozone, the impact from what is coming out of the US appears to be having more of an impression. As this is the case, it does feel like currency traders are treading water ahead of this evening’s FOMC meeting minutes.

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