Forex News: The pair remained in a relatively tight range yesterday and no special developments took place, mostly because the economic calendar lacked any important announcements.
Price is still trading below the 50 period Exponential Moving Average and above the support at 1.1700, which puts the pair in a range from a short term point of view. Today we expect to see a break of either one of these technical levels and the direction of the break will probably decide the direction for the day. Overall price is still making lower highs and lower lows, so we favour the short side as long as price is below the 50 EMA.
The ECOFIN Meetings will start today, attended by Finance Ministers from the EU member states. The Meetings are closed to the press but a formal statement will be released at the end of the day and sometimes participants talk to reporters during the day. Usually the Meetings don’t have a huge market impact but caution is recommended nonetheless.
The pair had a bullish day, with price climbing above 1.3160 and then returning below the level. The move was mostly caused by the overextended condition of the pair.
Yesterday we saw a retracement that is normal after the strong drop seen during the past week, but the overall direction remains down and we expect to see a bounce from the current level. As an alternate scenario, the move up may continue and reach the 50 period Exponential Moving Average but we don’t expect a break.
The British Manufacturing Production will be the day’s highlight, scheduled for release at 8:30 am GMT. The indicator shows changes in the total value of goods produced by manufacturers and usually has a hefty impact on the Pound, with higher numbers strengthening it. The expected reading is 0.3% compared to the previous 0.5%.
At 12:00 pm GMT the National Institute of Economic and Social Research (NIESR) will release a GDP Estimate and although this is not Government data, it can have a notable impact on the Pound. The previous estimate was 0.4% and higher numbers strengthen the currency.