Yesterday’s UK data was modestly bullish for sterling, and the market is reacting predictably, with GBPEUR bouncing just ahead of the 1.4500 support (again!!). GDP was up 0.6% for the fourth quarter of 2005, against expectations of 0.5%. The MPC vote revealed that Stephen Nickel was once again alone in his opinion that interest rates should be cut. These two pieces of data therefore point firmly to no imminent rate cut, and Sterling is enjoying a little rally as a result. Whether this can be sustained in the face of accelerating Eurozone growth is yet to be seen. If expectations continue to grow for the ECB raising rates, the GBPEUR rate may still fall on EUR sterngth.
We could see some action on the dollar this afternoon with the release of jobless claims and durable goods orders at 13:30.
GBP EUR – Support 1.4550, 1.4500
Resistance 1.4600/10, 1.4680
GBPUSD – Support 1.7790-1.7810, 1.7700
Resistance 1.7935, 1.8150
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