Will The Pound Receive A Boost From U.K. GDP Data?
Dear Traders,
The U.S. dollar appreciated against its major counterparts in the aftermath of the Fed’s minutes. The tone of the FOMC minutes was passively hawkish while the transcript showed increasing confidence that economic growth will pick up steam despite inflation concerns. Market participants are now pricing in the possibility of a tighter Fed rate hike path with a current 90 percent chance of a next rate hike in March and a 60 percent chance of three rate hikes through the year. The possibility of even four rate hikes in 2018 is currently over 20 percent. After initial teething problems, the dollar was finally able to end the trading day in positive territory against the euro and pound.
The British pound was volatile as expected but again failed to overcome the 1.40-barrier. Technically speaking, however, we got the price breakouts we were looking for and given the fact that 1.40 remained unbroken we got a dip towards 1.39. A next lower target could now be at around 1.3850/30.
Today we have the U.K. GDP scheduled for release at 9:30 UTC and this report could possibly provide a boost to the weakening pound.
EUR/USD: The euro traded with a downward tilt on the back of a strengthening dollar but from a technical perspective, we still see this pair confined to a sideways trading range between 1.2550 and 1.22. Only if the euro breaks significantly below 1.22 the short-term outlook will shift in favor of the bears.
The next top event risk is the minutes from the European Central Bank’s January meeting which are due at 12:30 UTC. However, unlike the January release, which covered the December meeting which had a new set of Staff Economic Projections revealed, the coming minutes will have much less hard information to discuss. Thus, it could be a non-event for euro traders.
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