Forex snapshot

Traders await the Bank of England and European Central Bank rate decisions at 12pm and 12.45pm respectively (London time).

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Source: Bloomberg

Germany data weighs on EUR/USD

The euro is trading at $1.3373, down 0.1% on the day, after German industrial production only grew by 0.3% in June, while analysts expected an increase of 1.4% in output. This is the second day in a row that German figures have disappointed traders, after yesterday’s factory orders dropped by 3.2% in the same month.

Germany holds a large amount of sway within the eurozone, and when its economy starts to slip it increases the possibility of ECB easing in the future.

Traders are not expecting a change to interest rates from the ECB, but the press conference at 1.30pm (London time) could give us an insight into what it is thinking. If additional easing is mentioned the euro could target $1.33 with $1.3403 acting as resistance. 

Sterling awaits BoE decision

GBP/USD is trading at $1.6841 and has been rangebound overnight, as traders play the wait-and-see game until the BoE announcement at 12pm (London time). The consensus is for no change to interest rates, but the comments that follow may encourage a buying opportunity.

At present, all nine members of the BoE want to keep rates and the stimulus package unchanged however, there is growing speculation that this might change. Any hawkish comments from Mark Carney could push the pound to $1.6905, with $1.68 acting as support.

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