by Jon Beddell
Foreign Currency Market Update – GBP / USD Update
Sterling rallied against the backdrop of a generally weak US dollar last week.
Stronger than expected employment data in the UK helped the Pound make strides after bouncing off a low of 1.4970. The number of people claiming unemployment benefit fell in June. Meanwhile, weak US manufacturing and consumer sentiment data prompted traders to sell the dollar lower through the course of the week, while better news on US bank profits improved risk appetite, boosting the “sell the dollar and buy higher risk currencies” trade. The Euro was a particular beneficiary.
The Sterling/Dollar rate went on to make a high above 1.5450 on Thursday, pulling back two cents on Friday. The big challenge now is the resistance at 1.5500. That was the April high, and a break above there would end the down trend that’s been in motion since the August 2009 high. The technical outlook is positive, but we want to see Sterling keep control of the 1.4970 level that marked last week’s low. Clients with Dollar requirements should consider placing a stop order below 1.4970. Meanwhile, the challenge is on to take out 1.5500 and see if we can establish a foothold above there.
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