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Friday, December 22, 2006

Sterling Outlook (22nd December 2006)

There are a raft of pre-Xmas data releases from the US today. November durable goods, personal income and spending, and the core PCE deflator will be unveiled at 13:30GMT. December's Michigan Sentiment index ensues at 15:00GMT. Durable goods are forecast +1.0% m/m. The core PCE deflator is forecast +2.4% y/y.

Michigan Sentiment index forecast: 90.2. GBP/USD sated sell interest at 1.9650 and 1.9660, and tripped stops above 1.9660, en route to an intra-day peak of 1.9681 circa 10:00GMT. 1.9606-1.9638 was today"s Asian session range. 1.9681+ obstacles include 1.9700, 1.9725, 1.9750, 1.9800, 1.9820, 1.9850, 1.9900, and 2.0000. 15-day highs just shy of 1.9750 were notched on Wednesday. A 14-year top a pip shy of 1.9850 was scaled at the start of this month (Dec 1). Helping underpin the pound is the risk of another 25bp UK base rate rise to 5.25% in February, and a further 25bp hike beyond.

News-wise: Vodafone has confirmed it is considering the acquisition of a controlling stake in Hutchison Essar (FT website).

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