FX Stabilizes Ahead of Bernanke's Taper-on Taper-off

Lower than expected UK inflation weighed on GBP across the board and boosted EURGBP towards its 200-WMA, but GBPUSD remained above 1.51 amid traders' unwillingness to extend USD longs ahead of Bernanke's speech tomorrow. The Fed Chairman's annual testimony to Congress' Joint Economic Committee will likely sound off a balanced approach aimed at keeping the door to the possibility of tapering asset purchases when the data warrants it, but knee-jerk selling in USD is likely to emerge on the existing likelihood that the Fed will also be able to increase QE, a notion that the central bank will not want to be displaced from market expectations. GBP traders will also see the release of tomorrow's retail sales, followed by Thursday's release of the revised UK Q1 GDP, which may produce a positive combination for the pair and possibly cap EURGBP. Both of last night's EURUSD are in progress as is GBPUSD, both USDCAD, 1 CADJPY, 2 EURGBP and 1 silver, all seen in the latest Premium Insights.