Forex snapshot

The pound is trading higher on the back of last night’s Federal Reserve minutes and it has managed to hold onto its gains ahead of the Bank of England meeting.

Pound coin and dollar note
Source: Bloomberg

The euro received a nice boost from the Fed last night but can it keep up the momentum before Mario Draghi’s announcement?

GBP/USD awaits BoE meeting

The pound is trading at $1.6177. Sterling received a shot in the arm on the back of the Fed’s commitment to low interest rates for an extended period. However, traders are now looking to the BoE interest rate decision and statement at 12pm (London time). Mark Carney recently stated that interest rates in the UK will rise in the second half of 2015. If he reiterates that point today, the pound could hit $1.6240 with $1.6066 acting as support. If Mr Carney hints that interest rates will remain low for a prolonged period, it could drift back to $1.6.

Euro awaits Draghi’s speech

The euro is trading at $1.2776. The single currency has managed to extend its gains versus the US dollar this morning, and I suspect it has more to do with a short squeeze on the US dollar rather than euro strength. Mario Draghi is under even more pressure to turnaround the eurozone now that the Germany economy has hit the skids, and will speak in Washington DC at 4pm (London time).

The euro is eyeing $1.28 but any suggestions from Mr Draghi that additional easing is required could drive the currency to $1.2628.

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.