Bulls remain in control of EUR/USD as the pair barely paused for breath at a zone of resistance near 1.4690 - 1.4700. GBP/USD, which has been similarly strong, is nearing resistance at 1.8509 and could break higher at any point. Indeed, shifting interest rate expectations for the ECB and BOE remain supportive of the move. While Credit Suisse overnight index swaps (OIS) are pricing in rate cuts by both central banks over the next 12 months, they have come off from the extreme levels we saw just last week. Barring a surprise rate cut by the ECB or BOE in the near-term, this pull back could help fuel further gains for EUR/USD and GBP/USD through the rest of the week.
Source: Credit Suisse Overnight Index Swaps, Bloomberg Source: Credit Suisse Overnight Index Swaps, Bloomberg