OPTIMISTIC comments earlier this week from Bank of England committee member Andrew Sentance saw sterling-US dollar march higher, hitting a year high against the buck during mid-morning trading yesterday. But although the inflation bounce added extra fuel to yesterday’s spike, the move higher proved to be unsustainable. There’s likely to be a clear psychological barrier to making any lasting move above $1.70 and the release of the latest Bank of England meeting minutes has the potential to unsettle traders. IG Index is currently quoting a price of 1.6818-1.6820 on the pair.
Sterling is also tipped to do well against the euro. Currency traders might also want to sell euro-sterling – the cross’s failure to bounce off technical support levels at 0.8850/70 suggests a move lower is still a distinct possibility. The downward move may not have finished and we could even see the pair test the water below the 0.8840 level. ETX Capital has a spread of two basis points around the spot.
Policymakers in the Eurozone may also be breathing a sigh of relief as euro-dollar failed to make it past $1.5050 last week. Unable to break through the resistance level, the pair slumped back towards $1.48 before finishing the week at $1.49. From a technical perspective, the single currency is a better sell at current levels and the key resistance on the upside that traders should be watching out for is $1.5063. FairFX is quoting a market price of 1.4932.
But while the single currency is struggling to strengthen further, the Japanese yen is still suffering from the greenback’s slide and testing its lows. Whatever the US says about wanting a strong currency, the dollar is still falling and hurting the Japanese in the process. Capital Spreads offers a dollar-yen price of ¥89.08-¥89.10.