Greece remains in focus

EUR/USD has the Greek issue hanging over it, and GBP/USD’s short-term rally is stalling. 

Pound notes
Source: Bloomberg

Greek saga continues

The meeting of the eurozone finance ministers will take place today, and Greece will be the main topic of discussion. Germany has rejected Greece’s application to extend the bailout but that is not to say another proposal won’t be put on the table by Greece.

The game of cat and mouse between Greece and the rest of the eurozone continues and Greece would like to receive assistance without any new terms or conditions. On the other hand, the European Central Bank does not want to appear to be weak, and that is why it will insist on some terms being attached.

The French and German PMI reports on manufacturing and services were a mixed bunch, and it led to some short-term selling of EUR/USD.

The currency pair is encountering resistance at the 200-hour moving average of $1.1370 and if this level is held it will make $1.13 the target. If the 200-hour MA is retaken the upside resistance at $1.14 will brought into play, and then $1.1450 will be in sight.

Sterling slips overnight

GBP/USD has dropped overnight as profit taking hits the pound. Sterling is losing its momentum after the surge higher on Wednesday on the back of the Bank of England minutes. GBP/USD is making a good effort to buck the downward trend that it has been in for many months, but it is stalling at the moment.

As I previously stated, the Federal Reserve is in no hurry to tighten monetary policy, and this will keep the currency pair in the upward trend that it has been in since the start of this month.

The UK will announce the retail sales report for January at 9.30am (London time). The expectations are for -0.1%, and this compares with 0.4% in December. The drop in unemployment and the rise in wage growth will trickle down to the retail sector in the form of higher spending, and GBP/USD will experience buying should expectations be met.

GBP/USD is receiving support at $1.54 and should this level be maintained the upside resistance at $1.5460 will be the target. Beyond that traders will look to the 100-day moving average of $1.5495. If $1.54 is taken out to the downside the next level of support will be found at $1.5360, and if that mark is punctured then $1.53 will be in sight.

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