Sterling is enjoying mixed fortunes at the moment
City Index October 19, 2011 10:23 PM
<p>GBP/USD Range: 1.5695 – 1.5780 Support: 1.5645 Resistance: 1.5825 Sterling is enjoying mixed fortunes at the moment although it’s being mainly driven by risk […]</p>
Sterling is enjoying mixed fortunes at the moment although it’s being mainly driven by risk trade. UK inflation is now at a 20-year high, rising from 4.9% to 5.2% over the last month, which was largely attributed to utility bills. Most economists tend to agree with the BoE that inflation will drop below 2% over the 2-year period, as in 2008 when CPI was at 5.2% but within 12 months it had dropped to 1.1%. We get the BoE minutes today and it is largely expected that we’ll see 9-0 and 9-0 on rates and further QE.
European headlines keep this pair extremely volatile as we head towards the important EU summit on October 23. Overnight a report in the Guardian indicated that the French and Germans had reached an agreement to extend EFSF to EUR2 trillion using leverage (something the Germans have been against) but with denials from EU officials on an agreement and a downgrade by Moody’s for Spain by two notches. The euro subsequently traded lower in volatile fashion. Today will be all about headline trading again as we approach the EU summit where the markets will punish an unsatisfactory plan.
JPY is back to tight ranges again as EUR/JPY dominates the pair. Today proceedings will be influenced by earnings from Morgan Stanley and American Express along with the release of US CPI and the Fed’s Beige book. Japanese economy minister Furukawa told reporters that a finalised package to deal with the strong JPY would be in place by the weekend, which could include boosting funds to companies who wish to expand facilities in Japan.
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