Forex snapshot

David Madden looks at how recent economic data and comments have affected the EUR/USD and GBP/USD pairs.

Pound slips after mortgage report

The pound has slipped versus the US dollar, trading at $1.6849, after the UK revealed softer-than-expected mortgage approval figures.

The British Bankers Association showed 42,200 mortgages were approved in April, and the consensus was for 45,200. Mark Carney recently cited the booming property market as a possible cause for concern, however this morning’s report suggests the housing market may not hamper the recovery after all.

The UK economy is growing and there is speculation that the Bank of England will increase interest rates in early 2015. Traders seem to be getting ahead of themselves and expecting too much when it comes to UK economic data.

The US will announce the durable goods report at 1.30pm (London time), and analysts are expecting a drop of 0.5% on the month. If the report is worse than expected we could recoup lost ground and target $1.6880, to the downside we may target $1.6760.

Spot FX GBP/USD chart

Euro awaits Draghi statement

The euro is in the red versus the US dollar, trading at $1.3643, as traders await the update from Mario Draghi.

Yesterday the European Central Bank president warned that low inflation and weak lending was threatening the eurozone’s recovery. Mr Draghi is due at make a statement at 2.30pm (London time). The ECB is keeping its cards close to its chest but some traders are viewing this as Mr Draghi laying the ground work for monetary easing next month.

If Mario Draghi gives additional hints that there will be a stimulus package next month we could see the euro go below $1.36. If the US consumer confidence report at 3pm is soft the euro could target $1.37.

Spot FX EUR/USD chart

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