The corrective pullback off post UK services PMI react highs of $1.5805 extended to $1.5630 in NY Tuesday, the rate closing the session at $1.5663. This sharp reversal in cable was again seen driven by euro-sterling, the rate reacting to a strong reaction to a MNI source story suggesting that ECB members don’t see the current strength of the euro as having a significant impact on monetary policy. The cross, which had pulled back from Friday highs of stg0.8717 to stg0.8555 yesterday, bounced back to stg0.8688. Cable trade through Asia consolidated the pullback between $1.5650/65 through Asia, while the cross was contained within stg0.86625/0.86795. Trade continues to take direction from euro action, with focus on Thursday’s ECB rate decision, and more importantly Draghi’s press conference. Though market not expecting a change in UK rates/QE at Thursday’s MPC decision, the view is that an expansion of QE remains on the table for later in the year, while the ECB holds tight. Thursday also brings BOE Governor in waiting Mark Carney’s appearance before the TSC to judge how he will direct MPC decisions going forward. Cable support seen at $1.5630/20, more toward $1.5600. Resistance $1.5665 ahead of $1.5680.
EasyForexNews Research Team