Not much has happened yesterday. While the euro slightly extended its gains as far as 1.0940, the British pound fluctuated more or less sideways versus the U.S. dollar. The limited fluctuations in both currency pairs did not permit any sustained profit for traders on Tuesday.
Ahead of Bank of England’s Quarterly Inflation Report and monetary policy announcement on Thursday we expect GBP to trade nervous between 1.4470 and 1.4310/1.4290. The Bank of England is forecast to keep interest rates on hold until after Britain’s referendum on EU membership. In the medium term, investors are pessimistic and pushed back their expectations on the timing of a rate hike. The U.K. Services PMI is scheduled for release at 9:30 GMT and may spur the cable for a breakout of its narrow trading range.
Prices narrowed and formatted a symmetrical triangle this morning. Traders should focus on a breakout above or below that pattern, which may ignite fresh momentum in any direction.
The technical outlook remains unchanged. Based on a symmetrical triangle in the daily chart, we will focus on an upside break of 1.0960 for any bullish and, vice versa, on a downside break of 1.0835 for bearish engagements.
All eyes will be on ADP numbers and the ISM Non-Manufacturing index. Both reports are expected to show a small pullback in comparison with the previous month but if numbers show a steeper decline, the USD could further weaken.
13:15 USA ADP Employment Change
15:00 USA ISM Non-Manufacturing Composite
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