Little change as summer markets take hold

Morning Comment        

Current mid-market inter-bank spot rates (as at 08:10 BST)

Major sterling

Major US$

Sterling emigrate

Other sterling

Euro crosses

Data / Events due today

Fundamental

Friday began with yet more doom and gloom from Europe with the German Economic Ministry noting significant risks to the largest economy in the region. The single currency duly continued to drift lower over the morning session on a general risk-off theme which had begun in Asia with weak Chinese data.

In the UK, producer price inflation few at its slowest pace since October 2009, backing up Bank of England forecasts that headline inflation will fall back below the 2% target next year. Sterling shrugged off the news, holding steady against both the UD dollar and euro.

There was another knee-jerk dent to investor confidence in the afternoon as Canadian unemployment data undershot consensus by some distance but the fine print showed full time jobs on the rise which sparked a sharp recovery.

A quiet day today on the data calendar so attention already shifting towards a busy day tomorrow where we have UK inflation data, Eurozone growth figures and US retail sales as headline releases. Wednesday is equally important with Bank of England MPC minutes, UK unemployment data and US inflation figures. UK retail sales and Eurozone inflation figures are released on Thursday before a quieter end to the week.

Technical

£-usd

Sterling gained a net ¾ of a cent on the dollar last week with Friday’s near ½ cent rally bringing us back towards the upper end of recent ranges although still short of the strong 1.5720/85 resistance zone. We open the new week with momentum studies directionless leaving no reason to expect a significant break either side. Above 1.5785 needed to clear the way for a renewed upswing towards 1.5910, 1.6000 and 1.6060 while support now sits at 1.5575, 1.5525 and 1.5490. below latter level supports a more bearish outlook with 1.5465/60, 1.5395/90 and 1.5270 the downside targets.

£-eur 

Sterling hit a 4-week low last Monday but recovered well from 1.2575 support to end the week 1 ¾ cents up on the single currency and we open this week around the pivotal 1.2750 level. A sustained break here is need to clear the way back to last month’s 1.2890 high ahead of 1.2920/25 and then further strong resistance at 1.2995/1.3070. Initial supports now at 1.2690 and 1.2665/55 protect the 1.2575/60 level then 1.2460.

Analysis of further currency pairs, forward contract pricing, and information on limit or stop loss orders is available at any time on request.

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