Sterling breaks $1.68

David Madden looks at how recent announcements will impact the EUR/USD and GBP/USD pairs.

Sterling breaks $1.68

The pound has broken through the $1.68 mark ahead of Janet Yellen’s statement at 12pm (London time).

The GBP/USD is up 0.11% on the day as it claws back the losses it suffered after Mark Carney’s comments on Wednesday. The selloff was triggered after Mr Carney said interest rates would remain unchanged for ‘some time’. This took the wind out of the bull run the pound was on as it reached multi-year highs against the US dollar last week.

The UK economy is improving slowly and this was proven by the low unemployment rate. Traders’ expectations have been managed by the Bank of England and sterling continues to regain some of the lost ground.

Janet Yellen is due to address the US Chamber of Commerce at 12pm, and if Ms Yellen maintains her mildly dovish stance we could see the pound retake the $1.6860 mark. On the downside it would be unlikely to fall back to $1.6740.

Spot FX GBP/USD chart

Euro in tight range

The EUR/USD has been trading within a small range against the US dollar since it retook the $1.37 mark.

The euro has been trading between the $1.3702 - $1.3722 ranges since yesterday afternoon. It briefly spent time below the $1.37 level but managed to retake it. The disappointing growth and inflation figures from the eurozone pushed the euro to a one-month low against the US dollar. The eurozone revealed a smaller-than-expected budget surplus this morning which had little impact on the currency.

We are not expecting any major economic announcements from the eurozone today, and Janet Yellen is addressing the US Chamber of Commerce at 12pm. Ms Yellen has previously stated that small enterprises are driving the labour market. If her comments confirm the Federal Reserve will support the economy until it sees fit, the euro could target the $1.3740 mark. Only hawkish comments would push the EUR/USD towards the $1.3660 mark.

Spot FX EUR/USD chart

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