Closed in NY at $1.5530, off sessions best recovery level of $1.5601. Rate had initially been driven higher by the no change decision by the BOE MPC for rates and QE, with risk also given a boost as China cut rates into the BOE announcement. Market was also seen positioning on hope that the Fed’s Bernanke would hint at QE3 during NY morning testimony. However, although noting the tools at the Fed’s disposal to counter any adverse events Bernanke did not provide the awaited signal which prompted long covering. Cable recovered in early Asia to $1.5536 before turning lower, Tokyo perception of the China rate cut seen as foretelling release of weak China data this weekend. Asian equities were sold off sharply, adding further to the reversal from risk-on to risk-off which took cable to lows of $1.5484. Move lower was seen in tandem with EUR/USD as the cross traded around stg0.8090 through the Asian session. Cable remains under pressure into early Europe via sell pressure in EUR/USD, as the cross holds heavy on overnight lows at stg0.8083. UK PPI and BOE inflation data due at 0830GMT.
EasyForexNews Research Team