Wednesday was a profitable trading day for sterling traders as our short-entry generated a good profit. The British pound initially dropped to 1.3350 from where it bounced back after BoE Governor Mark Carney told lawmakers in testimony that the risk of a domestic recession had receded because of the Bank of England's actions following the Brexit vote. He said that the U.K. economy is a "bit stronger" than policymakers had forecast. Subsequently, the pound stopped its fall on the support-level at 1.3320. There are no major U.K. economic reports scheduled for release today, so we recommend traders not to reinvest their weekly profits.
Unlike the pound sterling, the euro traded directionless sideways ahead of the European Central Bank announcement today. None of our yesterday's entries was triggered and we are curious to see whether there will be larger movements today. While the ECB is not expected to change monetary policy ECB President Mario Draghi is likely to lengthen quantitative easing for a second time. However, many analysts expect only little from today's decision given the low volatility seen ahead of the event. Let us be surprised and focus on the technical chart:
EUR/USD
As stated in previous analysis we focus on a break of the recent support at 1.1120, while upside movements might be limited until 1.13/1.1310. If Draghi 'under delivers' and disappoint the high expectations, the euro is likely to remain sideways between 1.13 and 1.11. However, in case of a break above 1.1315 we could see the euro rising towards 1.1340 and even 1.14. Nonetheless, we do not expect today's ECB decision to act as a big market mover but let's wait and see.
The ECB rate decision is scheduled for release at 11:45 UTC, followed by the ECB press conference 45 minutes later.
Here are our daily signal alerts:
EUR/USD
Long at 1.1283 SL 25 TP 25, 50
Short at 1.1225 SL 25 TP 20, 50
GBP/USD
Long at 1.3380 SL 25 TP 20, 40
Short at 1.3315 SL 25 TP 20, 40
We wish you good trades and many pips!
Disclaimer: Any and all liability of the author is excluded.