Sterling’s odd firmness against the euro and US dollar is due mostly to firmness in the cross-rates

Foreign Exchange - Pounds Sterling Outlook

Sterling’s odd firmness against the euro and US dollar is due mostly to firmness in the cross-rates,including some fairly exotic ones like the pound/Swedish krona, recommended by Morgan Stanley.This is a strange outcome considering that the IMF just said on Wednesday that Britain will have the worst contraction in all of G7 this year, 2.8% (actually, Japan will be worse). Still, sterling was strong today after the Bank of England reported a rise in mortgage approvals, 31,000 in Dec after 27,000 in Nov and widespread forecasts of an additional drop. Probably the main point is that pessimism was overdone. We doubt the trend will reverse to upward for sterling. Overnight policy committee member Blanchflower said rates can still go to zero and the BoE may consider quantitative easing.

This was taken as sterling-negative but perhaps it can be twisted to be sterling-positive.

Confused? You are not alone.

Bye For Now

Barbara Rockefeller
Forex Trading Reports

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