Sterling Looks for Relief

Daily Forex Fundamentals | Written by Investica | Oct 20 08 15:06 GMT |

Sterling should be able to secure net gains given the net reduction in dollar demand and a reduction in fear, but there will still be a high degree of volatility. The UK currency challenged resistance levels close to 0.7740 against the Euro on Friday, but was unable to strengthen through this level. Sterling was also unable to hold above the 1.7350 level against the dollar, but it had a relatively firm tone. There were no data releases with currency moves still influenced strongly by the movements in stock market prices. There will still be major fears over the economy and further pressure on the Bank of England to cut interest rates again. Sterling will still gain some support from optimism that the banking sector has been stabilised and there should be reduced banking-sector demand for the US currency. The Rightmove organisation reported a 4.9% decline in asking prices for October, but there was a monthly increase in house prices and the UK currency ended stronger against the dollar. The UK currency pushed to a high near 1.75 against the dollar and also tested resistance near 0.7710 against the Euro. The UK data recorded a larger than expected government borrowing requirement and is likely to be a small negative factor for Sterling, but this will have only limited near-term impact. Investica http://www.investica.co.uk Disclaimer: Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors.