EURUSD Recovers Post ECB, GBPUSD Pulls Off Best Levels

2019-01-25 13:30:00 Justin McQueen, Analyst

MARKET DEVELOPMENT – EUR RECOVERS POST ECB, GBP OFF BEST LEVELS

EUR: After a brief dip below 1.13, the Euro has recovered from the choppy price action seen in the aftermath of yesterday’s ECB meeting. While Draghi altered to language over growth risks (moving to the downside), providing a cautious outlook, this had largely been priced in, hence the rebound in EURUSD. The continued weakening of data in the Eurozone has also failed to push the Euro meaningul lower. 1.13-1.15 range looks to be intact for now. Elsewhere, the Euro may also find support as month-end EURGBP demand comes into effect throughout the next week.

GBP: Overnight, GBPUSD saw a delayed reaction, rising from 1.3070 to 1.3127, amid UK press reports suggesting that the DUP party had privately agreed to support Theresa May’s Plan B Brexit, if it includes a clear time-limit to the Irish backstop. However, with EU’s Barnier recently stating that the EU would not provide a time-limit on the Irish backstop, the initial gains have been faded, with GBPUSD tripping back below 1.31.

USD: The US Dollar is marginally on backfoot against major G10 FX pairs, with the exception of JPY as equity markets close out the week on a high. Given that the little on the economic calendar, market participants turn their attention towards next week’s key events in the form of trade talks and the Fed’s rate decision.