GBP/EUR is starting to get interesting again. After months of flirting with the 1.20 level and then retracing back to the 1.18 level it looks like we may finally see a continued break to the upside on this pair. Are you a buyer of EUR? If you haven’t secured anything above the 1.20 level I’d look to do so now if you have an exposure over the coming weeks. Do I think we’ll see GBP/EUR climb above 1.22/1.23 from here? No, I don’t. I think we’ll see a small downside move with us back into the 1.20’s. If we see a sustained break on EUR/USD below 1.30 I think we’ll see a push to the upside on GBP/EUR with EUR weakness being the main driver for the move higher however I expect a lot of resistance at the 1.30 level short term.
GBP/USD has reverted to trading in a range again. After a break of the 1.60 level last week we’re back into the 1.58’s. A quick poll – will we trade back in the 1.57s or will we break through 1.60 again? My inclination is that we’ll see a test of the 1.60 level short term however it’ll be short lived. If you’re a buyer of Cable I’d look to place market orders in at the 1.60 level to take advantage of the upside. I don’t think we’ll see much more on this pair as I still maintain we’ll see GBP/USD trading in the lower 1.50s this year, perhaps with even a break into the 1.49’s.
In terms of data out today we have limited releases from the UK and EMU with the Fed’s Beige Book (a report on the current US economic situation) from the US out early evening (UK time). I expect moves to be limited today with all eyes focused on tomorrows ECB Monthly report.
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