Bears Regained Some Control – The Calm Before The Storm?

Dear Traders,

The British pound has begun to give up some of its gains and dropped below the 1.42-level. Meanwhile, the upcoming U.K. referendum and the Brexit debate have led to new tensions between lawmakers and the Bank of England. In yesterday’s hearing, the central bank was accused of being supportive of the “remain”-campaign, overstating the positives. Uncertainties surrounding a potential Brexit-scenario are weighing on the pound which is why the odds are in favor of further bearish momentum. The closer the June-vote approaches, the more tensions we can expect.

Next lower targets are seen at 1.4155 and 1.4110. If GBP breaks significantly below 1.41 we might see a slide towards 1.4060 and 1.4020. On the upside, gains were capped at 1.4275 and it would require a sustained break above 1.43 in order to revive fresh bullish momentum.

U.K. Industrial and Manufacturing Production figures are scheduled for release at 9:30 GMT, a report which could have a short-term impact on the cable.

The euro reversed just shy of 1.1060 and ended the day lower against the greenback. Our focus now shifts towards the 1.0950-support. A break below 1.0940 could drive the euro towards lower levels at 1.0910 and 1.0870. On the topside, the resistance-zone at 1.1060/70 remains intact.

There are no important economic reports from the Eurozone scheduled for release today but going into tomorrow’s crucial ECB meeting, the euro could be vulnerable to further losses.

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