The pound sterling experienced a sharp rise against the greenback after U.K. inflation unexpectedly accelerated in July, indicating that the Bank of England could maintain a more hawkish bias towards the end of the year. Unfortunately our long-entry was skipped due to a price gap at the time when CPI data was released. This can happen sometimes in trading due to high volatility and we can only accept it.
The euro, however, failed to show any major movement yesterday. Investors remained risk-averse ahead of the Federal Reserve minutes today. Market participants are looking for an indication for a rate hike in September.
Despite concern over China’s growth outlook, which could weaken the case for an interest-rate rise this year, forecasts show that most investors still anticipate a liftoff as early as next month. We are looking forward to seeing what the minutes today will show and how the market will react.
FOMC Minutes are due for release at 18:00 GMT. Before that highly anticipated release, traders should watch U.S. Consumer Prices, scheduled for release at 12:30 GMT. This could be a high volatile trading day and we wish everyone many green pips.
SHS-pattern: Chances are that we will see increasing bearish momentum with a downside break of 1.1010. Lower targets could be at 1.0970, 1.0930 and further 1.0850. However, above 1.11 the U.S. dollar may lose strength, pushing the euro to higher levels such as 1.1145 and 1.1185.
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