Forex snapshot

Negativity continues to hang over both the EUR/USD and the GBP/USD with limited economic data due out today that could shake the currencies out of their current malaise.

Euro/dollar currency
Source: Bloomberg

EUR/USD traders disappointed by non-farms figures

Traders had hoped that Friday’s non-farm payroll figures might offer a reason for the weakness in EUR/USD to abate. A small bounce of 60 pips was seen over the course of the day, but hardly enough to give any real optimism that sentiment has changed. A template has been set for some time and markets will be expecting a change only driven by US economic data, rather than anything out of the eurozone. With very little economic data out today, Tuesday comes into focus with service PMI figures for almost all the major economic regions.

Following the move on Friday, EUR/USD is now no longer oversold but still at the bottom of the range and looking far from resilient. Previous moves below $1.34 have enticed traders, but a lack of economic reasons to support this stance may well see this level give way on any fresh challenges.

GBP/USD mostly unchanged

The pound is broadly unchanged versus the US dollar after GBP/USD declined 1% in the past fortnight.

The pound is trading at $1.6825 and traders haven’t made up their minds after last week's US jobs report. The figures were good but not great, so haven’t given a clear indication of what the Federal Reserve could do next. July’s UK contraction PMI dropped slightly, to 62.4, but still exceeded estimates. This is what the Bank of England want to see as there is a big difference between a healthy construction sector and booming one.

The BoE rate decision and statement on Thursday will be the focus of the week. No change in the interest rate is expected but an update from Mark Carney could provide a clue to what the strategy is.

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