United States Dollar:
The pound fell on Tuesday after UK consumer credit data printed weaker than expected. Mortgage approvals, released at the same time, were a little better than expected, but the news was shrugged off as investors sold GBP vs. both the USD and EUR. Month end buying in EUR/GBP fuelled the sell-off in GBP/USD. Meanwhile the situation in Gaza and the rising tensions between Russia and the rest of the western world has investors seeking the safe haven of the dollar. As for market specific events, the consensus amongst market participants is that the Fed will strike somewhat of a hawkish tone in tonight’s monetary policy statement. With this on the horizon as well as ADP employment and Advance GDP it may well be quiet today as far as the range in GBP/USD is concerned.
We expect a range today in the GBP/USD rate of 1.6850 to 1.7030
Euro:
EUR/USD also fell on Tuesday as the dollar strengthened across the board. There’s been little by way of top tier European economic data released over the last 24 hours to write about – Spanish CPI printed weaker than expected this morning which hasn’t done the currency any favours. Month end buying in EUR/GBP hasn’t stopped the rot in EUR/USD which now threatens to break below 1.34. German Prelim CPI is released at some point today and will be watched closely, although the impact of the print may be limited in the run up to the FOMC statement tonight.
We expect a range today in the GBP/EUR rate of 1.2600 to 1.2660
Aussie and Kiwi Dollars:
Not a lot has happened in AUD/USD and NZD/USD over the last day. NZD/USD has traded a narrow 30 point range whilst AUD/USD has drifted slowly lower. The better than expected US consumer data and the generally stronger USD have been the main drivers. GBP/AUD and GBP/NZD meanwhile have been quiet and open in London at 1.8070 and 1.9900 respectively.
We expect a range today in the GBP/AUD rate of 1.8000 to 1.8160
We expect a range today in the GBP/NZD rate of 1.9820 to 1.9990
Data Releases for the next 24 hours:
AUD: Building Approvals m/m, Import Prices q/q, Private Sector Credit m/m
EUR: Italian 10-y Bond Auction, German Prelim CPI m/m
GBP: GfK Consumer Confidence
NZD: No data
USD: ADP Non-Farm Employment Change, Advance GDP q/q, FOMC Statement, Federal Funds Rate
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