Sterling holds firm in the New Year
Disclaimer: THIS MATERIAL IS NOT INVESTMENT RESEARCH AS DEFINED BY THE FINANCIAL SERVICES AUTHORITY
Since the beginning of June 2009, the pound has been trading in a longer-term range against the US dollar. The 1.6750-1.7000 region has proved to be fairly strong resistance, on the downside the 1.58 level has supported sterling and continues to do so.
An interesting start to the year for sterling, cable opened at 1.6138 and an initial sell off in the opening week pushed cable down to 1.59 where traders supported sterling. Currently, trading back above 1.6250 and looking firm.
The support for sterling has been the result of various economic and fundamental data, more recently policy maker Andrew Sentance has been quoted as saying interest rates may have to increase this year. Analysts believe the comments from the policy maker are a bit premature but markets have seen this as another opportunity to continue to lift sterling.
The pound has now been rallying for the fourth consecutive day against the US dollar.
2009 was a fairly steady year for GBP/EUR many analysts predicted a final quarter rally for the pound against the single currency, but this move failed to materialise. The cross spent most of the year flirting around the 1.11 level. There were a few attempts to break below the 1.05-1.06 region throughout the year but the pound was supported on each occasion.
After a weak open to the year for GBP/EUR, the cross is failing to find any real direction. A small range has been formed between 1.1076-1.1217. Currently, trading at 1.1173.
Wednesday 13 January 2010, 12:44pm
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