THE pound has broken through £1.6300 against the greenback for the first time in over a year, amidst signs of an upturn in the UK housing market. Strength here is going to make it that bit easier for the Bank of England to start hiking interest rates in the months ahead. Combined with renewed investor appetite for risk, this could keep sterling supported for some time yet. The current IG Index price is £1.6305-£1.6307.
Despite the concerns over the Middle East situation, data released from the US earlier in the week boosted the markets, encouraging investors out of safer currencies, including the Japanese yen. US manufacturing was the highest since May 2004, which saw the yen fall against the euro. Technicals for this pair suggest the relative strength index is directing towards an uptrend, with potential for a ¥113.90 target. Capital Spreads quotes ¥113.61-¥113.64.
Yesterday, the Bank of Canada left interest rates unchanged at 1 per cent, while a stronger than expected fourth quarter GDP and an upward revision to the previous quarterly reading has kept the Canadian dollar well supported over the past few days. In the short term expect US dollar-Canadian dollar to continue to probe lower, following last week’s breakdown below the important Ca$0.9830-Ca$0.9820 support area, and look for a break and close below the key Ca$0.9700-Ca$0.9710 support zone. London Capital Group is offering a spread of Ca$0.9705-Ca$0.9709.