While sterling hit a two month high to the dollar in yesterday’s early morning trading, it again failed to hold a break above the $1.52 level and saw renewed weakness against the generally stronger euro which continues to correct itself against a number of its counterparts. Although many analysts viewed this as simply a corrective pullback against the majors and positive risk sentiment, the Euro continues to retrace its losses with a test of 1.2700 (High) with the EUR/USD pair.

It is advised however that buyers proceed with caution, as the state of the global economy still remains quite volatile and uncertain which would favor an eventual resumption of USD buying. We have already begun to see a mild USD recovery ahead of the North American open, and it will be interesting to see if this will continue in the final session of trade for the week.

Looking at the fundamental data releases from yesterday – UK industrial production data was stronger than anticipated, however an unexpected and third consecutive monthly fall in Halifax house prices weighed on the UK currency which is also being pressurised by ongoing concerns about the impact on the economy of the planned public sector cutbacks. The BoE, as expected, left rates and its quantitative easing measures unchanged and we will have to wait for the publication of the minutes to see if Sentence again dissented in favour of higher rates.
Sterling Price action this morning has actually been quite interesting, with the pound outperforming on the day and holding up well against a number of its counterparts considering the lack of positive fundamentals to support the Pounds movement. This however may simply be short-term speculative positioning so buyers should remain cautious.

This report was delivered to you by Tom Trevorrow of  Tor FX. Tor FX are one of the UK’s leading foreign currency exchange brokers, regulated by the FSA Payment Service Regulations 2009 (FRN 517320) for the provision of payment services and recently named European Currency Broker of the Year 2010. They assist private and corporate clients with superior rates of exchange against what banks provide.

Tom Trevorrow is a senior analyst and currency trader at Tor FX assisting private and corporate clients internationally with their currency transfers.

You can email tom.trevorrow@torfx.com with any questions or for his opinion on the FX markets or call him direct +44 (0) 1736 335264