eToro News
The ECB Rate Decision-The ECB is expected to leave rates unchanged at a record low of 1% amid weak economic conditions while outlaying inflationary risks as remote. The ECB will be keen to indicate current rates are appropriate especially with the Greek debt woes still echoing at the background. Overall investors expect the first rate hike by the ECB at the beginning of 2011 and any rate hike of the ECB before that time horizon due to elevated inflation rather than growth could have a negative spine off.
The BoE Rate Decision will be at the centre-The BoE is expected to leave rates unchanged at 0.5% with consensus polls pointing on an expected rate hike by the end of 2010.Investors will be alert to the BoE remarks on two major subjects QE and economic growth. QE an emergency measure which involves capping bond yields and printing money simultaneously is used to stimulate credit in a weak economy. If the BoE will mention future QE this literally mean the BoE sees more future economic weakness and will be ready to print more money. This will be of course Pound bearish. In addition if the BoE will outlay a rather subdued economic growth story even without mentioning QE then investors’ consensus on the BoE rate hike could shift from the end of 2010 to 2011 which is also rather bearish for the Sterling Bearish. However if the BoE will suggest carful optimism this could confirm investors bets on a better than expected UK recovery and will move investors to crowd on more Sterling bets. This will probably affect the most on EUR/GBP which could fall further.
Technical Update
EUR.GBP, Daily
The Pair is reaching the 0.875 support after a rather sharp bearish selloff. The pair’s journey south still looks in place. We suggest waiting for a slight bounce to the 0.887-0.89 zone before riding this bearish cycle.
Technical Opportunities
GBP.USD, Daily
General Overview- The Pair is currently trading sideways and it is unclear to which direction the pair will eventually break. Nevertheless we currently see a good risk reward bearish trade using this range.
Trading Advice- Place your stop loss above the upper range at 1.54 and ride a bearish cycle to 1.49.
Daily Forex Market Analysis provided by eToro
Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.
