Forex snapshot

Mild recoveries in both EUR/USD and GBP/USD, but the US dollar continues to dominate currency markets.

A pound coin and US dollar note
Source: Bloomberg

Euro oscillates around $1.25

Just over twenty four hours before the latest interest rate decision and statement from the European Central Bank, and EUR/USD is once again oscillating around the $1.25 level.

Considering the selloff we have seen in EUR/USD over the last six months, where 1,200 pips have been lost, it is difficult to argue for too much more of a move. Especially when you consider how limited any bounces have been in this time period.

Thursday is unlikely to see any change in the interest rate, but that will not stop the markets from expecting some sort of nod towards stimulus from the ECB president Mario Draghi.

As my colleague David pointed out yesterday, the asset-backed securities (ABS) purchase scheme will commence this month.

In the event of no change, a drift back below the $1.25 level looks likely for the euro.

Cable hovers around $1.60

Yesterday saw manufacturing figures for many of the major global regions, and the UK’s very strong figures in the morning caught many by surprise. Encouragingly, the German figures moved from contraction back into growth. However, the lingering concern that it is only a matter of time before the eurozone’s stalling recovery begins to hamper the UK’s own efforts will play on currency traders minds.

The Bank of England is also due to release its interest rate decision, but this is unlikely to change. In fact, the timeline for change looks a little further into the distance on a monthly basis.

GBP/USD looks set to continue lolloping around the $1.60 level until some new momentum can be obtained from decisive action in either the US or the UK.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.