Forex snapshot

The euro has been hit by profit-taking overnight and traders are now focused on the CPI report at 10am (London time). The pound has lost ground to the US dollar as traders lock in their profits.

Euro and dollar notes
Source: Bloomberg

Euro slips ahead of CPI data

The euro is trading at $1.2785, down 0.3% as traders quickly take their profits off the table as the dip in the US dollar was short-lived. Yesterday, the euro hit a three-week high versus the US dollar on the back of weak manufacturing figures, but now the focus is on the final CPI report from the eurozone at 10am. The consensus is for a reading of 0.3%.

‘Deflation’ has been the watchword of the eurozone lately. If the report misses analysts' estimates it could drive the euro to $1.2629, and only a large jump in inflation could push the euro back to $1.2840.

Sterling slides due to profit taking

The pound is trading at $1.5985, down 0.2% on the day. However, it has still hung onto some of the gains it made on the back of weak US retail sales and manufacturing figures.

The pound remains in a downward trend versus the US dollar. We are not expecting any economic updates from the UK today, but the US will announce jobless claims at 1.30pm (London time). We are expecting a reading of 286,000 – a strong number could send the pound to $1.5920.

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