Sterling pulls back from the 1 5650 level

GBP/USD

Range: 1.5603 – 1.5629

Support: 1.5450

Resistance: 1.5650

Sterling pulls back from the 1.5650 level ahead of the release of the UK GDP data and the minutes from the last MPC meeting. The market is unlikely to be surprised with a negative growth reading for Q4 2011 today and with the market expecting the MPC to add £75 Billion in QE next month, sterling could come under pressure today as the retail market look to fade 1.5650 with 0.8300 holding in EURO/USD.

EUR/USD

Range: 1.3015-1.3047

Support:1.2880

Resistance: 1.3080

The Euro continues to hold on to gains above the 1.3000 level overnight despite the Greek saga dragging on with the IMF and German Government trying to play hardball with the private creditors for the best possible haircut deal. The German IFO business climate index will be released at 9am this morning with the market looking for a reading of 107.6. Trader positioning continues to dictate this pair and although the single currency is 300 pips off its lows, the speculative community appear to be still short the single currency in the medium term.

USD/JPY

Range: 77.61-77.98

Support:77.35

Resistance: 78.30

So back to the 80’s we go as Japan records their first trade deficit since 1980 adding pressure to the JPY as we finally break out recent dull ranges. Japan posted a JPY 2.4 trillion deficit for 2011 and the IMF cut global growth forecasts citing the European crisis as the key risk. This evening we have an interesting FED meeting with lots of new information for the market to digest so expect some potential volatility as we plough through the content. The main change traders are looking for will be the replacement of the commitment to keep rates low until mid 2013 with a more explicit and flexible guidance on its longer run goals and policy strategy.

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