The pair closed in NY at $1.6384 after rate had seen a pullback low of $1.6344 from $1.6410 on the Fed taper announcement, but quickly spiked back up to $1.6486 as accompanying comments countered the initial hawkish reaction. Cable eased off high to $1.6366, recovered to $1.6408 before drifting lower into the close. Wednesday was seen as a good day for sterling, the key UK employment rate eased to 7.4%, better than the forecast median, and had taken cable to earlier session highs of $1.6370, from intraday lows of $1.6275, extending this recovery to $1.6405 in late Europe as sterling was seen as a good long bet into the FOMC decision. Euro-sterling, which had seen extended highs of stg0.8467 Tuesday, was seen as the key vehicle for the long sterling play, and reversed away from Wednesday’s high of stg0.8466 to stg0.8375 pre taper, before this corrective pullback extended to stg0.8345 post taper. This move lower inthe cross provided cablwe with an underlying buoyant tone despite feeling the downside pull from euro-dollar. Euro-sterling extended lows to stg0.8340 in Asia, trading around stg0.8350 into Europe. UK retail sales at 0930GMT in focus next ahead of US weekly claims, Phila Fed and housing data this afternoon.
