Forex snapshot

David Madden looks at how recent economic data has affected the EUR/USD and GBP/USD pairs, and how upcoming announcements might influence them going forward.

Pound breaks $1.69

Sterling has exceeded the $1.69 level, up 0.4% on the day, after the UK revealed stronger-than-expected retail sales figures.

In April retail sales rose by 1.3%, analysts were expecting an increase of 0.4%, which is a 6.9% increase on an annualised basis.

The Bank of England revealed the voting break down over interest rates and the bond-buying scheme. The vote for both remained nine to zero but reports are stating the rate decision voting is ‘more balanced’. Traders are viewing this as a sign that some members of the Monetary Policy Committee are moving towards a more hawkish outlook, even though some traders are speculating an interest rate rise may not be until early next year.

Now that the pound has pulled back the losses from last week we could move towards the $1.7 mark, while the $1.68 mark continues providing support.

Spot FX GBP/USD chart

Euro clings onto $1.37

The euro is still trading within a tight range versus the US dollar ahead of the European elections tomorrow.

The euro is trading at $1.3708, up slightly on the day, as Alastair McCaig noted the euro had been hovering above the $1.37 mark for the past few trading sessions. There is little expected in terms of economic data from the eurozone today, but the bond yields for a number of indebted eurozone nations has ticked higher. There is a possibility that Eurosceptic parties will do well and, in turn, hamper the reforms that Brussels is working on. If peripheral bond yields rise we could see the euro head towards the recent low of $1.3660.

Tonight, the Federal Reserve will reveal the minutes of the latest meeting when it trimmed the bond-buying scheme by $10 billion. A dovish tone from the Fed could push the euro towards the $1.3770 mark but it will take more than a soft dollar if the euro wants to target the $1.39 level.

Spot FX EUR/USD chart

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