As we highlighted yesterday, the US Fed’s FOMC are meeting with their interest rate decision due out later this evening. No change in policy is expected but we may get some insight as to their updated thinking in light of some slightly weakening data. So far the dollar remains unchanged with the likes of the EURUSD trading 1.0884 – 1.0936 since the start of the week. I’m getting a sense that this could be as non an event as a FOMC meeting could be especially with Friday’s latest Non-Farm payroll data looming which will carry a greater weighting. As a result, current levels are still in play with support still seen at 1.0850 and 1.0950 “holding moves higher”. We get the usual pre cursor ADP employment data at lunchtime today but as we have mentioned on several occasions here, this release doesn’t carry too much statistical weighting but typically is used more for identifying any trend.
I fear today could be one of those side-line days with little else due out in terms of potential FX market moving news. Later this morning we will get the latest Eurozone GDP 1st quarter figures with an unchanged reading of 1.7% YOY expected. Tomorrow we expect a little more action with a raft of PMI readings from across Europe including the ever important UK Services PMI. For Brexit watchers, this is a key measure as the services sector is the one that is likely to be most impacted by Brexit fears especially in the banking and insurance sectors. On the flip, we saw a strong reading from manufacturing sector with the UK PMI posting a three high year yesterday, clearly one of the sectors benefiting from the weakness in the pound.
In terms of FX market reactions, sterling did receive an immediate bounce but it was very short lived with current ranges and levels all still at play. GBPUSD still remains near the 6 month highs despite jumping 50 tics in response to yesterday’s Manufacturing PMI and so to refresh again 1.3000 is our resistance line for moves higher “while support around 1.2775 area needs to give way if we are to see additional downside in this pair”. EURGBP continues to do very little and .8404 offering support against any break lower towards lone term support at .8300/30 (GBPEUR 1.2005/48).