Forex snapshot

David Madden looks at how upcoming economic data could affect the EUR/USD and GBP/USD pairs.

Pound regains lost ground

Sterling has pulled back some of the losses it incurred this week as traders await the US GDP report at 1.30pm (London time).

The pound is trading at $1.6728, up 0.1% on the day after mixture of short covering and bargain hunting helped sterling. The main focus of the day is the US gross domestic product report, and the consensus is for a decline of 0.6%. This will give a good indication of what the Federal Reserve will do next.

The pound has been in a downward trend versus the US dollar this week as softer-than-expected updates from the UK dragged on the pound. Bad weather in the US was blamed for the poor growth during the first three months of the year. A strong GDP report could see the pound head lower towards the $1.66 level; to the upside we could target the 100-hour moving average of $1.6804.

Spot FX GBP/USD chart

Euro higher ahead of US GDP

The euro is back above the $1.36 level, up 0.18% on the day as dealers look ahead to the GDP report from the US.

As I mentioned previously, the euro has been in a downward spiral versus the US dollar for the past three weeks, as there is speculation that the European Central Bank will introduce a stimulus package to tackle deflation in the eurozone.The euro is trading at $1.3615 as traders square up their books before the US reveals its preliminary GDP report, and analysts are expecting a decline of 0.6%. If the report is worse than expected we could target $1.3660, however a strong growth report could drive the euro to $1.3550.

Spot FX EUR/USD chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.