Forex snapshot

All eyes are on the Bank of England as it releases the latest inflation report.

Mark Carney
Source: Bloomberg

Cable could remain below $1.60

With Mark Carney set to release and then discuss the latest inflation report for the UK, GBP/USD trading might be slightly stifled as traders wait to hear what he has to say.

Once again it is likely that we will get an opportunity to watch Mr Carney’s fancy footwork as he tries to dance around the specifics. Currency traders will be desperate to grab every nuance of change, while the BoE will be desperate not to set expectations for an interest rate increase timeline.

We will also see the latest unemployment figures for the UK too, but the significance of this has been diminished with the BoE instead considering the average earnings a more accurate barometer.

Unless Mark Carney lets slip a timeline it is likely we will see the US dollar continue to dominate the pound, and GBP/USD below the $1.60 level could be maintained.

Euro traders await ECB bulletin

EUR/USD traders will be looking ahead to tomorrow’s European Central Bank monthly bulletin, and could well decide today is a day for treading water. Throw into the equation that we will also see inflation figures for both Germany and France tomorrow, and there are plenty of reasons to keep the focus.

Very much like the pound, the euro has had a sustained period of pressure from the US dollar, and the short term offers few reasons why that might change. Continued weakness below the $1.25 level looks inevitable as we are still well off oversold territory on the relative strength index.

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