Tuesday July 26, 2005 - 10:28:43 GMT
Share This Story
INVESTICA Ltd - www.investica.co.uk
Sterling tries to find a base
Sterling was able to find support below the 1.74 level during Monday and the UK currency was able to push back above 1.74 against the dollar. Sterling also managed to strengthen against the Euro to highs just beyond 0.69, but was struggling to hold these gains in early Europe on Tuesday and renewed dollar gains pushed Sterling back down to 1.7360. There was some relief that there were no further terrorism incidents in the UK. There is also a feeling that the UK currency was over-sold on a very short-term basis.
There will still be major concerns over the domestic economic developments and strong speculation over an interest rate cut in August. Sterling has discounted a lot of bad news which will lessen the risk of further short-term losses. It is, however also the case that Sterling is prone to substantial and durable selling when sentiment turns decisively. In this environment, Sterling could still be exposed to heavy losses.
The market reaction to today's CBI report will, therefore, be important. The CBI reported that order books fell for the third consecutive quarter, but that the rate of deterioration eased with the order-book index rising slightly to -20 from -25 the previous month. If Sterling fails to hold initial gains, this will be clear evidence that market confidence in the UK currency remains depressed while sustained gains would increase the possibility that all the short-term weakness is priced in.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."