Raphael Sonabend, FX Analyst
Trends reversed yesterday as the euro fell against counterparts and the US dollar gained. Employment figures from the US saw a fall in claims from 291K to 282K, the lowest figure since the beginning of February 2015. This release tends to only affect in the short-term but traders may have grabbed on to the first piece of strong data after recent weakness in the dollar. It is too early to say if this may be the start of a slight recovery in the dollar but we’ll have a clearer idea after today’s session. A relatively light day on the data calendar will see US data in the spotlight with Final GDP at 12:30 and a speech from Yellen at 19:45.
GBP/EUR: Currently trading at 1.3702
- A solid release from UK retail sales saw an increase of 0.7% as a 0.4% increase was expected. This was the strongest result since November 2014, which is unsurprising as slashed prices have only just properly caught up with shoppers since the aftermath of Black Friday deals. The pound reversed previous trends and rose over a cent on the euro, comfortably breaching the 1.365 mark and heading toward 1.370.
- A quiet day ahead may allow the pound to continue gaining on the euro however recent trends suggest that there is still further potential strength in the single currency.
GBP/USD: Currently trading at 1.4813
- US unemployment claims beat predictions yesterday and hit 282K, forecast to be 291K this was a solid improvement. After UK retail sales saw the pair spike up to just above 1.499, US unemployment pushed the rate back down to below 1.481. For a clearer indication of whether the USD can hold onto these gains or even push on further, we will continue to eye this pairing carefully in today’s session.
- Focus today will be on US final GDP this afternoon then a speech from Yellen tonight. GDP is expected to improve on a quarterly basis from 2.2% to 2.4% and a result within expectations should see further strength on the part of the greenback. Yellen is due to speak on monetary policy and as ever with this controversial topic, volatility is likely to be seen.
EUR/USD: Currently trading at 1.0814
- Euro gains were halted yesterday as the pair peaked at 1.105. The greenback gained significant ground, pushing the rate back down below 1.088 as a solid figure from US unemployment was released.
- Today’s movements will give us a stronger picture of the future of this pairing as it may indicate the potential strength the euro has to fight off the dollar’s advances. Greenback gains can be expected to be reinforced by a strong US GDP figure, which is forecast to be released this afternoon.
GBP/AUD: Currently trading at 1.9017
- Strong gyrations around the 1.90 mark suggest volatility still remains in this pairing but despite this uncertainty, the pound’s gains continued against the Aussie. Limited data from this pair helped Sterling’s advances and US unemployment data was unable to help.
- Following yesterday’s trends US data may not affect this pairing and the pound may continue to gain. Aussie bulls will be hoping for a two-way conflaction between the pairing around midday.
GBP/NZD: Currently trading at 1.9622
- A quiet day from both sides of this pairing yesterday saw the day close barely above opening despite strong movements made throughout. The 1.9652, 1.9482, 1.9560 triangulation suggests that volatility could be lessening in this pair.
- Another quiet day today is likely to see similar movements with the pound potentially coming out on top in an attempt to recover some lost ground. US GDP today could lend a hand to Kiwi strength this afternoon, dependent on Sterling’s own power.
GBP/CAD: Currently trading at 1.8550
- The Loonie gained through yesterday’s session as the Bank of Canada’s governor Poloz said that cutting interest rates in January allowed the Bank to monitor the oil price situation. Defending his decision, Poloz said that the first quarter of this year is likely to be weaker economically but the second half should be strong. CAD traders saw the positives to his words, probably as the negative side had already been priced into the markets and the Loonie gained throughout.
- A quiet day today could allow the Loonie to continue gaining against the pound as no releases are due.
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