Forex snapshot

Cable traders are waiting for Bank of England governor Mark Carney and Monetary Policy Committee members to get a grilling from the treasury select committee today.

Euro and US dollar notes
Source: Bloomberg

Cable traders await treasury select committee meeting

The last two days have seen GBP/USD bounce (in the broadest sense of the term) by 40 points, having suffered a 500 point fall over the course of the previous six trading days. Only time will tell if this has more to do with dead cats or a change in sentiment, but with Mark Carney and members of the MPC due to answer politicians questions at 2.45pm this afternoon we might see further moves.

The fact that David Cameron, Nick Clegg and Ed Milliband have all agreed to cancel Prime Minister’s questions to head to Scotland highlights the seriousness of the Scottish independence vote. Currency traders will be monitoring for sound bites from all three party leaders as they push for the NO vote.

Pressure is likely to remain on GBP/USD until the election is over, and $1.60 remains a physiological level but fundamentals could see this give way.

EUR/USD pressure set to continue

Before the markets opened France posted slightly better-than-expected monthly industrial production figures and with only US whole sale inventories out later today, we might see a bit of a respite in the selling pressure on the euro.

As the eurozone embarks on a number of different stimulus measures the overall effect should be continued pressure on EUR/USD. Intraday moves yesterday saw more than a 1000 point move from the year highs in June to today’s levels. Certainly the boost that eurozone manufacturing and export industries must be feeling should begin to be reflected in the broader economic data being released.

With the markets attention likely focused on the trials and tribulations of the UK government, this will be a welcome distraction for the weary eurozone investors.

The pace of the US recovery remains far in excess of the eurozones, and a continuation of negative pressure looks likely until these actions start to be reflected in economic releases.

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