The euro and pound have both been in full retreat against the US dollar on Wednesday (August 11). One euro is worth just $1.2845 after trading as high as $1.3226 on Tuesday. A British pound nets $1.5636 after a $1.589 peak Tuesday.

Following one of the most highly anticipated events in the economic calendar the Federal Reserve presented a gloomy outlook for the US economy in its post meeting statement yesterday, saying that the pace of economic recovery is likely to be more modest in the near term than had been anticipated.
Committee members went on to say as a number of factors including high unemployment and a depressed housing market weighed on activity over the last few months and announced fresh steps aimed at supporting recovery, saying that it would use …

Overnight movement with Sterling following the weakest RICS Housing data release in a year added to the downward GBP momentum built yesterday as expectations of a dovish BOE coupled with the risk that too much QE is priced for the FED saw cable break 1.5840 support to touch 1.5773
Yesterday was a quiet session for US markets, showing how significant tonight’s FED decision will be. While no change to official US interest rates is anticipated this evening, there is much speculation as to whether the Fed will announce fresh quantitative easing …

Following on from the BoE Interest announcement today – Bank of England Governor Mervyn King is setting aside his inflation target to protect the economy from the biggest budget cuts since World War II. As a split widens on the Monetary Policy Committee on the danger posed by rising prices, King insists it may be a “considerable” time before the benchmark interest rate of 0.5 percent returns to “normal.” The nine-member panel are certainly dovish in terms of their stance on interest rates, growth and Inflation however inititally following the …

The value of the dollar continues to sink even in the midst of positive earnings reports and a modest improvement in the level of private company hiring during July.

Sterling got a lift from this morning’s news from the Halifax that house prices were up 0.6% in July, compared to expectations for a fall. The GBP saw six month highs versus the dollar yesterday, rising as high as $1.5968, though many in the market feel that it could face stiff resistance as its approaches the $1.60 level. Versus the euro, sterling remains firm just below the Stg0.83p level. Todays release of PMI which came in below expectations has caused an increase in Short positions against the Pound and we …

The current price movement remains constructive for the pound with cable breaking the 1.5637 level – the 50% Fibonacci of the Aug’09 – May ’10. Analysts are expecting further gains in the short-term, after Sterling broke above its 200-day moving average last week. Therefore, a significant break above $1.5836 would trigger a further upward move towards $1.5970, the highest level in almost six months. Services PMI tomorrow will be the key release of the week for the UK – anything printing 55 or above should see the next leg …