Closed in NY Friday at session lows of $1.5162 after rate had from around $1.5250 as news that Moody’s had cut the UK’s sovereign rating from AAA to AA1 (stable outlook) hit the wires. Negative press reports over the weekend, especially directed at Chancellor Osborne, saw the pound under pressure into opening Asian trade (Wellington). Cable was marked down to $1.5135 at the open with sales in a thin market extending the move to a low of $1.5073. Euro-sterling spiked up to stg0.8701 into Friday’s close with this rate pushed up through recent highs of stg0.8764 to stg0.8775 before Tokyo opened. The pullback in the cross to stg0.8711 allowed cable to edge back up to $1.5137. A brief dip to $1.5116 attracted fresh demand that took rate to extended highs of $1.5139 ahead of Europe. The Asian open has left a gap in the charts to $1.5162 which will be looked at for closure. Moody’s expected to downgrade UK banks, possibly as soon as this morning, which may provide another negative knock, but suggestions are that sterling should recoup part of the overnight losses, though the underlying trend remains sterling negative. The Italian election to be watched, a Monti coalition win could add more negativity via the cross.
EasyForexNews Research Team