06/02/2014: Update on my shorts on EUR/USD and GBP/USD

I am running a slight profit on both currently.

I have around 6 pips on EUR/USD and 25 pips on GBP/USD.

Both trades have become marooned in the market caution before both ECB and Bank of England give their monetary policy updates but I will run these positions over the rate decisions.

The Bank of England is not expected to move on rates or QE but could update forward guidance, although I expect this is far more likely to come with the Quarterly Inflation Report next Wednesday.  Therefore expect another non-event from the Bank of England in half an hour.

The ECB is more interesting as there is the chance of a cut to its main Refinancing Rate (by 15 bps to 0.10%).  Although a rate cut is possible, the vast majority of consensus does not expect a cut. Declining inflation in the peripheral Eurozone is actually seen by the ECB as beneficial in the attempt to improve competitiveness, while liquidity conditions in the Eurozone have improved slightly in recent weeks.

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