The major currencies we monitor in our report took different ways for yet another day yesterday. The Euro and the Pound had diverging performances as the foreign exchange markets have lost their normal pace these past couple of weeks.
This can be attributed to the unexpected geopolitical developments we’ve had with the plane crash in Ukraine and the sanctions taken against Russia, developments that are distorting the normal outlook of the major currencies hence their recent unpredictability. We expect this situation to normalize over the coming weeks, August is almost here and it’s always a month of low volume and reduced volatility as traders and investors are traditionally more interested in their vacations rather than trading.
Coming back to our analysis, the Euro ended the day almost unchanged against the US Dollar in a day where we had the release of the PMI reports from the Euro-area. German and Euro-zone figures printed in a steady to positive fashion off-setting the decline in France and allowed the Single currency to remain afloat above the 1.3450 area.
Over the next 24 hours the main interest is the release of the IFO Survey that discusses the business confidence in the Euro-area. Analysts expect the report to show similar levels of confidence as last month and that could help the Euro to hold above this key support for now. With the recent developments in Ukraine and the sanctions imposed on Russia the risk in the report is really to the downside so we need to be careful and prepared for that as well.
The Pound extended its losses for another day marking the fourth consecutive day of losses this week after the release of the Retail Sales report didn’t offer any positive news to the Pound bulls. Keep in mind that the amount of long positions in the Pound has been on record-levels all this time and the disappointing reports of late have driven traders to unwind a portion of these positions.
Especially after the latest minutes from the Bank of England revealed that there is little chance for the central bank to raise rates this year the bullish sell-off drove the currency below the 1.7000 area. Today the release of the Gross Domestic Product figures is expected to show a steady outlook and the UK currency might find the chance to breathe easier with the 1.7000 level being the first resistance to overcome.
Economic Calendar
Time
Currency
Event
Importance
Forecast
Previous
8.00
EUR
German IFO – Business Climate
Medium
109.4
109.7
8.00
EUR
German IFO – Expectations
Medium
104.4
104.8
8.30
GBP
Gross Domestic Product (QoQ)
High
0.8%
0.8%
12.30
USD
Durable Goods Orders
High
0.4%
-0.9%
Times are in GMT
TECHNICAL ANALYSIS & LEVELS
EUR/USD
GBP/USD
FTSE 100
Gold
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