Forex snapshot

Manufacturing PMI data for the eurozone, UK and the US is expected to set the tone for both GBP/USD and EUR/USD.

Euro and dollar currency being counted
Source: Bloomberg

EUR/USD below $1.2600

It has been sometime since the economic data releases coming from the eurozone have surprised traders in a positive way. Today’s miss by the eurozone’s final manufacturing PMI figures will not come as too much of a shock. 

Tomorrow’s European Central Bank press conference, and the update that ECB president Mario Draghi will give, is expected to be the leading indicator for the EUR/USD pair. Due to the timing of the next bank stress tests, the take up in the targeted long-term refinancing operations fell some way short of what the markets would have been hoping for. Once these tests are out the way there is a chance the next tranche in December will be more widely utilised.

EUR/USD yesterday broke below the $1.2600 level and so far is showing little inclination in swiftly breaking back above that.

US dollar keeping GBP/USD at low levels

GBP/USD currently sits 1,000 pips below the highs it set in mid-July. The shift in recovery momentum has solidly moved from the UK over to the US, and in the last week has given no reason to believe this will change soon.

By the end of October we should have seen the US debt-purchasing scheme finally come to an end as the US completes its quantitative easing.

As the UK continues to be adversely affected by a weak eurozone the balance of strength towards the US dollar should ensure that GBP/USD remains at these low levels for the time being.

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