Dollar strength returns to FX markets

EUR/USD and GBP/USD have given up most of their gains accrued from the previous 24 hours of trading.

George Osborne speaking at Mansion House
Source: Bloomberg

US retail data to drive GBP/USD direction

Last night saw both George Osborne and Mark Carney deliver their Mansion House speeches. Governor Carney was never likely to give too much room for optimism about interest rate rises because of the current health of the economy and worries over the eurozone. Chancellor Osborne on the other hand introduced the concept of running a surplus budget, and this would infer increased austerity measures being brought into the UK economy.

This afternoon will see the latest US retail sales figures and it may give a better insight into the economy’s ability to handle an interest rate hike. At the moment, the congregation of moving averages just under the current spot price will give GBP/USD some natural support.

EUR/USD continues sideways trading

Yesterday afternoon saw a cooling of the hardline stance that Germany had taken with Greece, as the possibility of a staggered release of the next tranche of funding was brought to the table. Considering what little progress had been made by Greece in implementing further austerity measures, this was a welcome relief for those hoping to see the eurozone remain intact.

When you consider that the Greek economy only accounts for roughly 1.8% of the eurozone’s total economic output, the percentage of time the major nations have had to set aside to deal with this issue has been staggering.

A continuation of the lateral move we have seen in EUR/USD looks likely until a final resolution can be reached.

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