Friday to be 'tight' for British pound sterling as the recent rebound for the UK currency runs out of steam

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Published on Friday, 10 August 2012 09:05

Written by Sam Coventry

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"The Pound encountered strong resistance in the region of 1.5685 against the U.S Dollar and declined steadily through the course of the day" - Adam Solomon at TorFX.

The pound sterling (Currency:GBP) has hit and fallen off resistance against the US dollar (Currency:USD) but is just managing to hold the 1.27 level against the euro.

The pound euro exchange rate is 0.08 pct in the red at 1.2700 at 9:42 AM in London. Trading Central see gains above 1.2690 with targets at 1.2730 and 1.2755.


The pound dollar exchange rate is 0.28 pct lower at 1.5594. "Another tight trading session for Cable as it trades back  and forth within a range. A break is likely although difficult to predict in which direction it will come," says Manoj Ladwa at TJ Markets.

The pound Australian dollar exchange rate is 0.3 pct higher at 1.4831. Trading Central see a negative configuration on the charts for this pair, 1.476 is possible.

"The Pound encountered strong resistance in the region of 1.5685 against the U.S Dollar and declined steadily through the course of the day. The UK currency  did manage to edge above 1.27 versus the Euro, as the structural vulnerabilities within the Euro-zone continues to have a damaging effect on the single currency," notes Adam Solomon at TorFX.

In the UK, the latest trade data showed a headline deficit of £10.1 billion for June, the widest gap in goods and services for 15-years, led by a decline in exports from the UK.

"The data perfectly illustrates the underlying lack of confidence in the UK economy and sentiment has deteriorated this week following Wednesday’s inflation report," says Solomon.

The Bank of England have cut growth forecasts to zero, amid fears that the economy will be unable to generate any positive momentum. There were also renewed doubts about whether the UK would be able to attract defensive capital inflows as investors were less convinced that the UK economy could provide safe-haven demand given the decline in UK fundamentals.