The British pound dropped towards 1.5110 after the MPC meeting minutes had nothing new to report. The decline in oil prices increases the likelihood that inflation rates would remain under pressure, the minutes showed. Low inflation gives the Bank of England room to maintain its current monetary policy settings. Investors therefore expect the BoE to keep interest rates unchanged through 2016.
The euro favored a bearish bias yesterday, tending towards a break of 1.0920.
Next levels to pay attention to:
EUR/USD
Bearish: The euro would first need to break below 1.0920. The focus will then turn to the 1.09-barrier, which will be important to be significantly breached in order to revive fresh bearish momentum. Below 1.0880, a lower target could be at 1.0860-40. With a sustained break below 1.08, we expect the euro to drop again towards 1.0640.
Bullish: Buy attempts above 1.0985 could be rewarding. However, we expect the 1.1030/45 area to cap gains in the EUR/USD in the near-term. A break above 1.1070 could drive the euro for a test of 1.11.
GBP/USD
Bearish: Short-traders should wait for a break below 1.5110 and further 1.5090 to sell the pound to lower levels. Lower targets could be at 1.5050 and 1.5005.
Bullish: Above 1.5190 chances are that GBP heads for 1.5210 and 1.5240, but traders should be risk-averse given the recent resistance at 1.52.
The most important piece of data will be U.S. Retail Sales, scheduled for release at 13:30 GMT today. The report is expected to surprise to the upside, which is why dollar bulls may drive the USD higher ahead of the release.
Furthermore, BoE Inflation expectations, scheduled for release at 9:30 GMT and Michigan Confidence at 15:00 GMT could have an impact on the currency pairs.
We wish you good trades and a happy weekend!
Here are our daily signal alerts:
EUR/USD
Long at 1.0975 SL 25 TP 30, 50
Short at 1.0890 SL 25 TP 30-35
GBP/USD
Long at 1.5165 SL 25 TP 20, 45
Short at 1.5090 SL 25 TP 25, 50
We wish you good trades and many pips!
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