British Pound Sterling: Currency continues struggle vs 16 majors, but GBP-EUR continues to threaten further moves higher

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Published on Tuesday, 24 July 2012 09:40

Written by Rob Samson

International Money Transfers at our sister site

"There's not much in the way of UK data today so moves in cable will continue to take their cue from EUR/USD" - Alex Edwards at UKForex.

The pound sterling (Currency:EUR) continues to struggle on the FX markets, the only bright spot remains the GBP-EUR pairing.

The pound euro exchange rate is 0.1 pct higher than at Monday's close at 1.2808. A technical note from UBS says As long as support at 1.2729 holds, the risk remains for a break above 1.2894 and expose the cross to 1.2998.


The pound dollar exchange rate is 0.05 pct lower at 1.5489. "A break under 1.5394 would be an important bearish development - opens the way to 1.5270. Resistance is at 1.5626," say UBS.

The pound Australian dollar exchange rate is 0.34 pct in the red at 1.5059.

"Although the Pound is struggling against the majority of the 16 most actively traded currencies, the UK currency continues to push to fresh 44-month highs against the struggling Euro before some profit taking brought the rate back towards 1.2800," says a note from Adam Solomon at TorFX.

There will be further expectations of support for the Pound as a safer alternative to the Euro, especially with Euro-zone fears rising week-by-week.

There flows into Sterling was not enough to stop the Pound declining against the lower-yielding currencies with a fresh 7-month low against the Yen.

The focus this week in terms of UK economic data will fall on Wednesday’s GDP data, given expectations of a further quarterly decline, which would reinforce concerns that the recession is deeper than first anticipated.
 
"Despite the fact that there was no economic data released from the UK on the day, speculation that Q2 GDP numbers that are due to be released on Wednesday may show three consecutive quarters of economic contraction in Britain was cited as another factor behind Mondays weakness in the pound. Theres not much in the way of UK data today so moves in cable will continue to take their cue from EUR/USD," says Alex Edwards at UKForex.