We have seen serious Euro weakness overnight, which is why GBP EUR is higher, EUR USD is much lower, but Cable is relatively static. Dollar strength is also evident as President of the San Francisco Fed’ Bank suggested rates may need to go as high as 5.5% next year to contain inflation. (In my opinion this will not help, since the inflationary pressures are almost solely due to rising world energy prices, which cannot be influenced by monetary tightening!)
Yesterday’s Inflow from Foreign Investment figures showed that investors ploughed over $91Billion into US assets in August, versus analysts expectations of $60Bn. This helps to explain the sustained dollar strength.
GBP EUR – Support 1.4600 then 1.4560
Resistance 1.4740 then 1.4770
GBP USD – Support 1.7420 then 1.7388
Resistance 1.7520, 1.7535 then 1.7570
DATA: Bank of England minutes (09:30)
US Housing starts (13:30) – This isn’t usually a very significant figure for currency markets
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