Tuesday April 26, 2005 - 10:14:44 GMT
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INVESTICA Ltd - www.investica.co.uk
Industrial weakness spoils Sterling's advantage
Sterling gained further support from general Euro vulnerability and the UK strengthened through the 0.68 level against the Euro on Monday. Sterling, however, failed to hold this level and retreated slightly in early Europe on Tuesday. Sterling was also unable to hold above 1.91 against the dollar.
The CBI monthly industrial survey was weaker than expected with a decline to -24 in April from -13 in March and this will reinforce medium-term concerns over the manufacturing sector. The domestic influences are still likely to be limited in the short term, especially with little in the way of major economic data this week. There is likely to be some concerns over the domestic political situation and this may restrain Sterling buying interest to some extent, although a substantial impact is unlikely. The principal impact of the election may be to discourage Bank of England public discussion over interest rates which will maintain market uncertainty over the May interest rate decision.
Sterling is still in a position to ain support from the weak Euro-zone economic conditions and the continuing political concerns ahead of the French May referendum. These positive influences are likely to be offset by doubts over the longer-term Sterling fundamentals.
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