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Wednesday, November 01, 2006

Sterling Outlook (1st November 2006)

Cable opened in Asia around 1.9075 and we have seen a range of 1.9068-90. EUR/GBP has spent the day between .6690-95. Talk out of Japan today has been of some large imminent sales in GBP/JPY as big players start to trim their carry trade positions.

These players tend to follow the Ichimoku analysis carefully and levels of interest are the recent highs at 224.50, the kijun line at 222.17 today, a very good buy-level since late March of this year, and the top of the Ichimoku cloud at 220.90 today.

Order books are relatively light at current levels with some take profit sellers seen in cable ahead of important resistance at 1.9145 and some light buying interest at 1.9030. EUR/GBP books show buyers at .6670, sellers at .6725 and little or nothing in between.

USD sentiment has turned very bearish and many traders feel that the only thing that could now stop cable from testing the December 04 highs at 1.9550 would be a significant down move in GBP/JPY but with a November rate hike by the MPC seen as being a done deal, they see the prospect of such a major sell off as unlikely.

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