While we initially anticipated further trendsetting movements in the GBP/USD on Thursday, traders have been disappointed by the cable’s zigzag moves ranging between 1.4445 and 1.4360. In the face of GBP’s recent depreciation, the currency might have taken a little breather yesterday, which has led to false breakouts and limited movements, making it an overall non-profitable trading day. Bank of England officials kept its monetary policy unchanged and said the outlook for growth and inflation has weakened further. Thus, investors continue to hold a very bearish bias over the medium-term.
The euro, however, started the day with some profitable bullish moves towards 1.0945. That short-term rise can be attributed to speculation that further European Central Bank stimulus may be limited. On the other hand, some ECB policy makers expressed a preference for an even larger rate cut, according to an account of the Dec. 3 policy meeting, published on Thursday. The ECB next meets on January 21 and investors will be looking for new insights into the ECB’s guidance.
The U.S. dollar slightly weakened on cautious comments from Federal Reserve President James Bullard, who sounded more cautious by saying the latest decline in oil prices may delay the return of inflation to the Fed’s target of 2 percent.
All in all, it was none of our favorite trading days as the market failed to provide much consistency in the currencies performances.
Today, traders will have another opportunity to watch out for some strong movements in the U.S. dollar. U.S. Retail Sales are scheduled for release at 13:30 GMT and this report could trigger a strong reaction in the greenback. Retail Sales are expected to show a decline in December and any surprises could affect the dollar’s performance. Last but not least, Michigan Confidence is due at 15:00 GMT.
Let’s see if we can pocket some profit on the last trading day of this week.
Have a nice weekend.
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