*Last Updated February 15, 2006, 12:03 am

Daily report by CMC Markets

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FOREX ANALYSIS

Sterling in focus ahead of key UK economic data; Dollar looks for momentum off Bernanke testimony.

February 15th - The dollar started to lose some ground late in yesterday’s European session with cable recovering some of the earlier losses and settling around the 1.7350 level. There is however a swathe of UK Economic data due for release over the next few hours that may well make GBP/USD a currency pair to watch in the near term as the market looks for further indications as to where monetary policy at the Bank of England will go next. The central bank’s inflation report will be under scrutiny after yesterday’s unexpected fall in CPI, whilst the employment stats can also expect to be in focus too - any further suggestion that a BoE rate cut is to be expected at the start of next month is likely to further pressure Sterling. Washington is also set to attract attention as the day progresses with Ben Bernanke’s first house testimony due – although there had been earlier speculation that the Jan 31st rate hike would be the last for some time from the Fed, opinion continues to shift against this given the strong run of economic data we’ve seen coming out of the US in recent weeks. Again any concrete signs as to when the next tightening will be seen - and perhaps more importantly just how high rates will have to go – will be acted upon by those trading the greenback, so look for further momentum as the day progresses…

Paul Jackson and Enis Mehmet



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