Cable holds onto upside despite downbeat government forecasts
December 6th - News yesterday from the UK’s Chancellor of the Exchequer that the country’s economy had struggled through much of 2005 failed to detract from Sterling in recent trade, with the Pound trading in relatively tight ranges against the common currency and having maintained most of last night’s gains over the greenback. A better than expected reading in the UK’s BRC retail sales monitor may have provided some support as yet again this suggests that the threat of inflation still lurks, whilst Industrial Production data due for release in the next hour may offer further direction. After this however the Pound may find itself drifting somewhat – there’s little else on the UK economic calendar this week other than the Bank of England rate announcement (Thursday) and consensus here appears to be that another “no change” verdict will be declared. Cable may benefit from further dollar outflows – especially if oil makes a sustained breach of the key $60 level, in turn fuelling trade deficit worries – but otherwise the near term outlook for Sterling may be looking somewhat lacklustre…
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