GBP Mid-day Analysis

An upside breakout on the charts is indicative of an economy that was trying to recover before the Greek situation rained on the global parade. The UK economy is also set to gather momentum off the positive progression in both the US and German activity. While we doubt the UK will be able to threaten with higher rates in the near future, it might be clear that Pound pricing down in a 1.5250 to 1.50 range is too cheap. On the other hand the upward track in the Pound over the last 36 hours is dented slightly by slack UK 4th quarter construction results. We see an eventual return to 1.55 which in turn will foster talk of a major bottom in the Pound but we would not pay up or chase the Pound yet. Buy breaks to 1.53.