UKForex: Sterling slumps and continues to test recent lows [16/12/2010]

UKForex: Sterling slumps and continues to test recent lows [16/12/2010]

United States Dollar: The pound slumped yesterday and it continues to test recent lows vs. the US dollar this morning. GBP/USD opens at 1.5565 after so far trading to a low of 1.5542 early on this morning. The rot started early yesterday following Moody’s announcement that it has put Spains rating on review for a possible downgrade. The sell off in EUR/USD dragged GBP/USD lower too. UK unemployment data was then released later in the morning and came in much worse than expected, jumping from 7.7% to 7.9% in October. GBP/USD shifted lower through various support levels throughout the day yesterday as a result. Focus in the afternoon turned to US CPI, but this came in as expected at 0.1% for November. However the Empire State Manufacturing Index, which was released at the same time, was positive, recovering from a negative reading in November. This supported the USD advance. UK retail sales data is due today.

– We expect a range today in the GBP/USD rate of 1.5500 to 1.5640

Euro: EUR/USD fell following the news that Moodys had put Spain on ratings review for a possible downgrade yesterday. It fell from 1.3370 to a low of 1.3208 and opens this morning at 1.3230. The focus over the next few days will be on the European Council meetings and what officials have to say about possible bail outs and plans for Spain following Moodys recent announcement. EUR/GBP is higher this morning and pushed higher throughout much of yesterday, this coming following the release of weak UK unemployment data in the morning. GBP/EUR opens this morning at 1.1780.

– We expect a range today in the GBP/EUR rate of 1.1720 to 1.1840

Aussie and Kiwi Dollars: Whilst risk remains off the USD has strengthened across the board, including against the high yielding commodity currencies. AUD/USD fell in line with EUR/USD yesterday, slipping from .9950 to a low of .9850 in the last 24 hours. It trades at .9870 currently. NZD/USD is lower and opens up in Europe at .7360. It has just triggered stops under .7380 and gapped 20/30 points lower. It means that GBP/NZD has pushed slightly higher and this trades at 2.1150 currently. NZ Business confidence surveys released last night did not help the Kiwis cause, both sets of figures coming in below market forecast. On the bright side, after four months of data showing the manufacturing sector as being flat in NZ, November showed some improvement in the industry. Despite this NZD is still getting sold this morning. GBP/AUD meanwhile is steady and trades at 1.5790.

– We expect a range today in the GBP/AUD rate of 1.5700 to 1.5860

– We expect a range today in the GBP/NZD rate of 2.1040 to 2.1260

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