Forex snapshot

Currency traders wait to see the latest UK inflation figures and later in the morning ZEW economic sentiment figures.

Mark Carney
Source: Bloomberg

GBP/USD eyes $1.57

The latest UK inflation figures are due to be released this morning and currency traders will be debating how close the Bank of England governor Mark Carney is to having to write a letter to chancellor George Osborne. Low UK inflation levels are, for the time being, not necessarily a bad thing as the last few years have seen the spending power of the UK populous dented, with weak average earnings increases. When looking at the inflation rate it is also worth noting that this next quarter in the run up to Christmas is the most important for the both food and clothing retailers, and as such even more aggressive price wars could materialise.

As highlighted by my colleague David Madden yesterday the break below the $1.57 level could be a psychological one, and a squeeze below the current $1.5650 levels could take GBP/USD all the way down to $1.55.

EUR/USD awaits German ZEW

Today’s German ZEW economic sentiment figures will also be watched closely, as last month’s negative figure was the first for the country in almost two years. Germany is still seen as the nation most likely to lead the rest of the eurozone out of recession and an analytical and institutional backdrop of negativity would be a blow to the process. Yesterday’s speech by European Central Bank head Mario Draghi did breath life back into the EUR/USD, adding almost 100 pips to the beleaguered currency cross. Subsequently overnight Asian currency traders have wiped out over half of this move. 

The 50-day moving average still appears to be a barrier that EUR/USD has neither the heart or inclination to break through. It is the same old story but US dollar dominance still appears to be the trend. Only a break above the $1.26 level and or the 50-DMA would give reason to re-assess our negative outlook.

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.