Rollercoaster ride for sterling
Currencies Direct February 10th 2010 - < 1 minute read
Rollercoaster ride for sterling
A good start for sterling soon lost momentum following the Bank of England inflation report and Mervyn Kings press conference. The markets and sterling were initially boosted following a report in Le Monde newspaper of a Germany led aid plan for Greece. The ECB did not comment on these reports but the rumour alone was enough to drive the markets higher with the USD shedding some of its recent gains along with the Yen- GBP/USD pushed through 1.5750 and GBP/EUR 1.1425. However the markets made a quick u-turn as party pooper Mervyn King dampened the mood with a dose of reality- the key blow was the affirmation that it is far too early to conclude that no more QE needed- this forced GBP/USD back to 1.5650 and GBP/EUR to 1.1350. Expect the “will they or wont they” that is the ECB assisting Greece to dominate the markets over the coming sessions.
In economic data from the UK earlier December Industrial production output came in stronger than expected at +0.5%- good news for the UUK economy but not significant enough to lift sterling. Sterling is suffering at the moment as it is being sold on the fear factor. Later today we have Bernanke’s testimony to the congressional committee- this could lead to some US dollar volatility.
report by Phil McHugh
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