Tuesday’s best performer was the British pound which rose towards its next resistance zone at 1.2320/50. The pound was supported by better than expected U.K. CPI data, limiting speculation that the Bank of England will need to ease monetary policy further. After bouncing off the 1.2330-resistance level we recommend sterling bulls to wait for a break above 1.2375 in order to buy GBP towards 1.2425. However, if the pound drops back below 1.2220, we expect increased bearish momentum towards 1.2170/50.
The U.K. Labor Market report is scheduled for release today at 8:30 UTC and any changes in the headline figures could have a significant impact on the GBP/USD.
The EUR/USD however, refrained from trading any lower than 1.0970. On the other hand, the pair was also not able to take the hurdle at 1.1030 which is why the euro remained confined to a narrow sideways trading range. If the euro falls below 1.0940 the bias could change in favor of the bears, driving the pair lower towards 1.0830.
While there are no economic reports from the Euro-zone today the price action could be determined by dollar flows. However, U.S. Housing data (12:30 UTC) and the Fed’s Beige Book (18:00 UTC) might be of secondary importance for traders.
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