Mike Paterson’s daily Forex brief
Yesterday’s Minutes from the last MPC meeting of the Old Lady, which I reported as I was signing off, continued to knock the Pound and in a busy morning session we’ve now also seen a surge in the Euro after stronger than expected German IFO data.
GBPUSD has been down as low as 1.5649 before being dragged higher again by the surge in EURUSD through the strong 1.3300 resistance lines this morning, but this has meant a further decline in the Pound v Euro with EURGBP climbing ever higher to 0.8490 so far (GBPEUR down to 1.1776).
Across the board we’ve seen the Pound weaken with GBPCHF below 1.4300 and GBPAUD back down through 1.4700 as traders run scared on the prospect of further easing in the UK based on the MPC’s 7-2 vote last time.
Whether this sentiment is justified or not it certainly shows the Pound’s fragility as I have long argued.
With the Euro’s advance gaining momentum this morning after the better than expected German data traders seems to be disregarding the negatives still surrounding the Greek bail-out package but this could just be the squeeze on Euro-short positions that I have discussed previously.
Either way we have at least broken out of recent ranges, which should at least liven things up a little and prevent any complacency / yawns from the terraces.
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