Evolving monetary policy has put more life into FX markets, helping to distract markets from the ongoing developments in Greece.

Source: Bloomberg

GBP/USD looks to push on beyond $1.56
The steady rally in GBP/USD, fuelled by Mark Carney’s comments earlier in the week, continues. Although the dollar received something of a lift yesterday thanks to Janet Yellen, Mark Carney’s apparent conversion to the cause of higher rates is still providing the bullish catalyst for further gains. Cable is spending its third consecutive session testing the rising trendline off the April lows, with a break through here targeting the $1.59 level on the daily chart.

Daily stochastics remain firmly bullish, and on the hourly chart a bounce off the 50-hour simple moving average ($1.5614) has provided bulls with fresh upward momentum.

EUR/GBP in full retreat
It is a very different story for the euro versus the pound, as the single currency falls to its lowest level against sterling since November 2007. There has been little love for the euro ahead of an European Central Bank meeting this afternoon that is not expected to reveal any major new information. EUR/GBP remains a ‘sell the rallies’ market – with bounces back towards £0.70 providing useful entry points, and a target around £0.6910. 

BoC rate cut spurs USD/CAD
The Bank of Canada’s decision to cut rates yesterday put a rocket underneath this pair, adding further to a trend that has been in place since the beginning of 2013.All eyes are now on the C$1.30 level, the highs from 2008/2009. Admittedly the daily relative strength index and stochastics indicators are still at overbought levels, so intraday dips need to be watched for before moving into fresh long positions. Moves back to C$1.28 should be viewed as buying opportunities. 

Fresh multi-year lows for AUD/USD
Commodity currencies have felt the pinch of late and the Aussie is no exception. Investors have viewed the Canadian rate cut as making an Australian one more likely, with bearish pressure resuming here and pushing the Aussie back below the $0.76 level. $0.7270, the high from January 2009, is now the level to watch for in AUD/USD, as the weekly downtrend reasserts itself.

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