British pound sterling: UK currency could find some buying interest against the US dollar at current levels

Details

Published on Friday, 13 July 2012 08:57

Written by Sam Coventry

International Money Transfers at our sister site

"The Pound has been gaining against the Euro from its position outside the Euro-zone as a ‘safer’ alternative to the single currency and the result of the bond auction yesterday supports that claim" - Adam Solomon at TorFX.

The pound sterling (Currency:GBP) is holding firm against the key majors on the foreign exchange markets this morning, however it is worth noting the Australian dollar is showing some decent strength:

The pound euro exchange rate is 0.06 pct up on last night's closing level, at 9:45 AM in London GBP-EUR is at 1.2652.

The pound dollar exchange rate is 0.03 pct higher at 1.5433.

The pound Australian dollar FX rate is 0.25 pct lower at 1.5183. The Australian dollar will have taken heart from growing anticipation of further stimulus in China whose Q2 GDP growth came in at 7.6%, its slowest pace since Q1 2009 taking H1 growth to 7.8%, which was in line with expectations.


"Cable (pound / dollar) sold off sharply yesterday pushing it closer to the next area of support around the 1.52 area.  It has been here a number of times in the last year, so could find some buying interest," says Manoj Ladwa at TJ Markets.

This technical level is also of interest to Adam Solomon at TorFX:

"The Pound initially found support in the region of 1.5450 against the Dollar and sank to the lowest level in a month later in the day, testing support levels under 1.54 with wider demand for the U.S currency from a safe haven perspective."

Meanwhile UK benchmark yields plunged to record lows at the latest Gilt auction with the yield below 1.75%, reinforcing speculation that there was defensive flows into UK bond bonds.

"The Pound has been gaining against the Euro from its position outside the Euro-zone as a ‘safer’ alternative to the single currency and the result of the bond auction yesterday supports that claim," says Solomon.

There was, however, a continuing lack of confidence in the domestic economy, which curbed demand for the UK currency against the rest of the majors, especially considering the additional pressure on the government finances.