Risk aversion continued in the US afternoon and as stocks opened in negative territory the pair went on a stop hunt to post fresh 6 week lows of $1.5913, the rate later bounced to close at $1.5950. Euro-sterling recovered off earlier lows of stg0.8124 and with sterling on the defensive the cross ground higher to close around stg0.8138. Cable opened flat in Asia and steadied following comments from the Governor of the Bank of England that warned the UK economy will not recover until banks own up up to their bad debts, adding that he is ready to inject more stimuli if needed. Cable slipped to lows of $1.5936, before the rate recovered to $1.5945 and settled in a tight range. Support seen at $1.5912 (38.2% of $1.5269-1.6309, 23 Aug high), ahead of strong demand into $1.5905/00 ($1.5901 – 50% of Aug-Sep rally). Sharp falls in Asian equities on the open added weight to euro-sterling and the cross ground to lows of stg0.8134. Dip demand bounced and the euro-dollar extended recovery helped lift to stg0.8148, later easing on profit take sales.
EasyForexNews Research Team