Good size Swiss and UK name buying of cable was noted from the European open. The buying was reportedly related to Vodafone's GBP 1.8bn sale of its 25% stake in Swisscom Mobile (FT website). The above-mentioned M&A-related demand, plus the instigation of fresh GBP/JPY carry trades on the back of dovish comments from BoJ Governor Fukui, and squeezed GBP/USD shorts, helped propel sterling to a high of 1.9654.
Today's Asian session range was 1.9467-1.9502. Sterling elicited support circa 1.9600 on its pullback from 1.9654. Sell interest at 1.9600 was sated en route to that high. Sub-1.9600 support points include 1.9582 (yesterday's top), and 1.9523 (yesterday's NY session peak). 1.9654+ resistance levels are located at 1.9665 (last Friday's post-US CPI high), 1.9712 (last Thursday's post-UK retail sales data top), and 1.9730.
Minutes from the December 6/7 MPC meeting will be published at 09:30GMT tomorrow. These are expected to reveal that the UK base rate was held at 5.0% by a 9-0 vote, following November's 25bp hike.
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