Forex snapshot

Federal Reserve tapering has put pressure on GBP/USD and EUR/USD.

A US dollar and ten pound note
Source: Bloomberg

Pound above $1.69 post FOMC

GBP/USD is holding above the $1.69 mark as the Federal Reserve gave little away during last night's meeting.

Adding to the pound's woes were the lower-than-expected Nationwide house price index data for July. It would appear that Mark Carney’s plans to cool the UK housing market are working.

There were no surprises from the Federal Reserve last night. The quantitative easing package was trimmed by $10 billion and interest rates remained unchanged, but Janet Yellen gave no clear indication of when interest rates would rise.

The US jobless claims report at 1.30pm (London time) is the figure to watch ahead of tomorrow’s non-farm payrolls report. The consensus is for a reading of 303,000 people claiming jobless benefits.

Alastair McCaig stated that the $1.6920 level was acting as support yesterday, and it has now become a point of resistance. Strong jobless claims could push the pound to $1.6788.

Euro helped by German jobs report

The euro is trading at $1.3394 after Germany revealed a decline of 12,000 in unemployment. This set the tone for the eurozone unemployment and CPI data which came in at 11.5% and 0.4% respectively, however the drop in inflation is worrying. The euro has managed to trade higher following the announcements but I suspect this will be short lived as European Central Bank continues to focus on deflation. 

If the euro takes out the $1.3375 level the next area to watch is $1.3317, with $1.3440 is acting as resistance.

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