The FX markets have trade relatively sideways today on mixed sentiment. It seems that the market is unsure of what is to come. The GBP/EUR pair still looks like a another test at 1.20 could be on the cards despite the ECB’s persistent efforts to back up their currency and keep it strong. The ECB’s Financial Stabillity report released this afternoon shows that sovereign debt risks remain the biggest threat to the Eurozone’s financial stability.The widespread fear of contagion will not go away overnight and will continue into next year.

GBP/USD has seen a volatile day yet is still fundamentaly trading side ways. The BoE met earlier today and announced as expected that interest rates were to remain on hold at 0.5% and QE would be held at £200Bn. It is unlikely that this stance will change moving into Q1 next year as the bank of England continues with its wait and see approach.

The outlook for the Pound is looking alot better than where we were just 2 months ago, this week the NIESR GDP estimate has shown that the UK economy is still recovering and indicates that some form of momentum is now being gathered. House price data and UK retails sales figures next week will be key in determining where the pound goes from here.

Best Regards
Luke Zorab
Currency Dealer

“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”