Forex snapshot

Today is Veterans Day, which is a bank holiday in the US, and a number of markets from European countries will remain open but volumes might be a little lower.

Alastair McCaig

2014-11-11T09:22:00+0000

Pound coins and dollar note

Source: Bloomberg

GBP/USD below $1.60

GBP/USD continues to trade below the $1.60 level and has given little indication over the last four trading days that it has the stomach for a fight. Tomorrow will see the Bank of England governor, Mark Carney, announce the latest UK inflation report. Ahead of this we might well see currency books being trimmed as the markets wait for the Bank of England’s assessment on the economic state of the union.

As has now become the norm, currency traders will be trying to judge the timeline for the BoE to start raising interest rates while Mark Carney will be trying to give as little away as he can manage. All of this should ensure that assumptions are jumped to and volatility remains in GBP/USD. The 50-hour moving average at $1.5860 along with the 100-hour moving average at $1.5895 should prove a barrier to any upside move.

GBP/USD chart

GBP/USD chart

GBP/USD chart

EUR/USD could retest $1.2380

Last week saw the European Central Bank president, Mario Draghi, infer that the region could see further stimulus in the form of quantitative easing. While hinting at this he failed to give any clear guidance as to what might be the trigger, what would be the fire power used, and when that could happen. This has kept the markets confused, while slightly optimistic that something might happen in the future. This is a strategy that has been used by Mr Draghi for some years now.

The short-term should see negative pressure on the EUR/USD pair remain, with a retest of last week’s lows below $1.2380 a strong possibility.

EUR/USD chart

EUR/USD chart

EUR/USD chart

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