Tuesday December 5, 2006 - 11:25:50 GMT
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INVESTICA Ltd - www.investica.co.uk
Sterling remains vulnerable to at least a partial correction after recent strong gains.
Sterling was unable to strengthen through the 0.6720 level against the Euro on Monday and was also blocked below 1.9850 against the US dollar. The UK currency drifted weaker in early Europe on Tuesday after another disappointing retail sales report with a move to 1.9750 against the dollar.
The British Retail Consortium (BRC) reported that like-for-like sales rose 0.5% in November, the lowest annual increase for 8 months. Sales were dented by warmer weather, but there will be concerns that wider consumer confidence will continue to deteriorate and have a negative impact on wider spending levels.
The CIPS index for the services sector rose to 59.8 in November from 59.3 and the firm figure will ease immediate concerns over the economy. Growth and interest rate expectations are still liable to weaken slightly which will limit the potential for Sterling gains and increase the risk of a corrective retreat.
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