Forex snapshot

The rallies in both the EUR/USD and the GBP/USD are already coming under pressure, and look to be short-lived bounces. 

Euro sign
Source: Bloomberg

GBP/USD sees directional stimulus

Over the last few days GBP/USD has received directional stimulus from a number of different places. Wednesday’s Federal Open Market Committee statement was a touch more dovish as the anticipated start date for US interest rate rises was edged a little further down the road. The IMF report on its anticipated global growth then followed, which gave the UK economy a thumbs up while lowering expectations for much of the eurozone. Considering the eurozone is the UK’s largest trading partner, you can’t help but wonder how long it will be before its issues cross the channel.

The short lived move above $1.62 looks unlikely to be tested again in the short-term and a move back down below $1.60 looks more likely.

EUR/USD gives back week's gains

Last night European Central Bank president Mario Draghi made his usual positive noises about action the ECB would be willing to take in order to combat inflation and stimulate the eurozone economy. Despite this, EUR/USD has given back some of the gains forged over the course of this week. With the US set for a long weekend as it enjoys Monday’s Columbus Day bank holiday, it will be interesting to see if both equities and currencies fluctuate on the back of US traders organising their exposure.

The rally in EUR/USD baulked at the $1.28 level and looks to be heading back down to $1.26. If the sentiment to US dollar strength returns, it will be a major test of the recent lows just above the $1.25 level.  

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