Forex snapshot

GBP/USD’s correction is as much a lateral move as it is a retracement, while the European Central Bank must be hopeful that the weakness the euro has had against the US dollar continues.

A pound on top of a US dollar note
Source: Bloomberg

Markets wait to hear from FOMC and MPC

This morning’s poor industrial and manufacturing figures for the UK have done little to push the GBP/USD rate any higher. The last couple of weeks have seen the rate drift lower at a very sedate pace. Although questions are now beginning to be asked about the likely timeline for the US to start raising their interest rate, it still looks likely that the UK will be the first to show its hand.

The next big driving forces will be Wednesday evening's Federal Open Market Committee minutes and Thursday morning's Monetary Policy Committee rate statement. As my colleague David Madden stated it could well be central bank comments that ultimately trigger another leg higher.

EUR/USD improves but still below key level

The ECB president Mario Draghi will be speaking on Wednesday evening at a lecture in London, and it is unlikely he will waste such an opportunity to talk down the strength of the euro. EUR/USD is below the key $1.3600 level, but in a far from convincing manner and still some way away from the intraday low of $1.3505 that it hit last month when the ECB first announced the latest measures to tackle low inflation and stumbling eurozone recovery.

Although we are hearing more commentary out of the eurozone, the impact from what is coming out of the US appears to be having more of an impression. As this is the case, it does feel like currency traders are treading water ahead of this evening’s FOMC meeting minutes.

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.

Find articles by analysts

Find out more about