A thin start for the Cable market in London with volumes understandably low and interest down on a normal Monday. Sterling has had a good run higher since Friday's U.S Payroll disappointment and Asia carried the baton to 1.9970 before Europe picked up the pace.
European names were seen squeezing the market to 1.9975 but Asian and Middle East offers have capped the bounce at the highs. A modest pullback to 1.9960 found fresh demand out of Europe a Paris name has reportedly helped nudge the Pound back to 1.9973. Consolidation now the theme as the early activity looks to have sapped momentum from the market.
The charts look good for another 2.00 test this week but we expect to see a slower pace above the figure with profit taking ahead of this week's U.K rate decision. There is enough uncertainty surrounding the MPC meeting to force profit taking in the direction of the expected 1/4-point hike. However, with U.K interest rates expected to rise above Fed Funds for the first time in a while the Pound should be able to hold an advantage this week.
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