THE TIPSTER

 
Kathleen Brooks
WITH the pound starting to lose steam on the back of slightly weaker economic data, the recent strength in sterling crosses may well be coming to an end. While the pound looks under threat, look to buy euros around £0.8300 for a move towards £0.8410. Also, look to sell sterling-yen around ¥136.80. CMC Markets’ spread for euro-sterling is £0.8335-37. CMC Markets’ spread on sterling-yen is ¥135.50/58

With concerns about the level of Eurozone debt easing over recent months, the US dollar has come up against a brick wall, halting any appreciation for the greenback. But looking past Europe, the dollar’s fortunes against the Japanese yen gives traders a potentially interesting medium-term play over the next few months. The end of 2009 saw dollar-yen move to its worst levels in 15 years. However, the dollar then staged a rebound, clawing back more than 1,000 points over the next six months. It is early days, but once again the dollar has started to show early strength ahead of the big level of ¥85.00. Traders with a medium-term view may want to consider trading the end-of- year contract. IG Index is currently quoting dollar-yen for December at ¥85.88-¥86.00.

The prospect of further stimulus from the Fed has helped to send the dollar down some 10 per cent over the last month. Meanwhile, debt problems facing Europe have taken a back-seat, which has helped euro-dollar to stage a mini-rally. But can the euro extend this period of strength? Capital CFDs quotes a price of $1.3156-$1.3157.

Cable has seen some weakening after flirting with the $1.60 level. With data showing that the economic recovery may be losing momentum and fears mounting that growth will slow while inflation remains sticky, sterling could yet come under further pressure. ShortsandLongs.com has a spot sterling-US dollar spread of 1.5726-1.5729.