Both EUR/USD and GBP/USD experienced short breakouts of their recent trading ranges but ended the day more or less unchanged against the U.S. dollar. While the euro dropped below the 1.11-level the pair was able to stop its fall just slightly above the current support at 1.1070. The cable, however, traded higher on hopes the UK could reach a deal with the EU on terms of Britain’s membership. As negotiations could last for some time before reaching an agreement and even then, Brexit concerns are not off the table, the pound could be vulnerable to larger losses at any time.
Sterling traders should keep an eye on the U.K. Retail Sales report scheduled for release along with Public Finances at 9:30 GMT. Retail sales are forecast to show an increase and if figures beat expectations, GBP could head for a renewed test of 1.44 and further 1.4425 and 1.4445. Below 1.4270 we favor a bearish stance, shifting the focus to lower levels at 1.4250 and 1.42.
The euro bounced back from the 1.1070-level and climbed above 1.11 again. Whether the common currency is able to stay above that level remains to be seen and could hinge on the appetite for U.S. dollars. U.S. Consumer Prices are scheduled for release at 13:30 GMT and if CPI data surprise to the upside the greenback could rally in response. Bear in mind that a break below 1.1070 could send the euro quickly towards 1.1050 and 1.0990. Current resistances are seen at 1.1150 and 1.12.
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