GBP/USD: Bottom At 1.4235? GBP Awaits CPI And Carney's Comments
Dear Traders,
The performance of the British pound was hampered by a short-lived upside correction, which was more limited than we had previously expected. While we anticipated the short pullback to last until at least 1.4335, the pound sterling reversed shy of 1.4325. The currency pair is now facing its support at 1.4230 and if we see a break below that level, GBP could slide towards next lower targets at 1.42, 1.4150 and 1.4110. Short-term resistances are seen at 1.4310/25 and 1.4350.
Sterling traders will pay attention to the U.K. Consumer Price report, scheduled for release at 9:30 GMT today. While the Core CPI is forecast to hold steady, inflation data from December may show an uptick. Whatever the case, any changes in CPI could have a strong impact on the currency. Furthermore, Bank of England Governor Mark Carney is scheduled to speak on the economy at 12:00 GMT. If he sounds more dovish, GBP could extend its losses versus the U.S. dollar.
The EUR/USD traded sideways within a narrow trading range. With prices above 1.0910 the euro may head for another test of 1.0945 and further 1.0975. On the bottom side we see a current support-area ranging from 1.0870 until 1.0845. The currency pair will first need to break this area significantly in order to test next important price levels at 1.0834 and 1.0810.
The most important piece of economic data from the Eurozone will be the German ZEW Survey due at 10:00 GMT alongside the Eurozone Consumer Price Report. In case of any disappointments, the euro could be trending downwards.
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