Currency news - Temporary Sterling relief

Temporary Sterling relief - 08-01-08

The 1.9650 level will remain an important technical level for the UK currency as it was the low seen in August when the initial phase surrounding the sub-prime crisis erupted. Sterling found further support towards 0.75 against the Euro.

Sterling held its ground on Tuesday despite a weaker than expected retail sales report. The British Retail Consortium (BRC) reported that like-for-like sales were at a three-year low of 0.3% for December which reinforced fears over a slowdown in consumer spending.

Sterling did receive a boost following a reported 1.3% increase in house prices for December according to the Halifax Bank. The data will ease immediate fears over the housing sector to some extent and could deter speculation over a rate cut this week, although the decision will still be very close. There may only be a temporary respite as the overall fundamentals are liable to deteriorate.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

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