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Friday, December 08, 2006

Sterling Outlook (8th December 2006)

Fresh market-moving influence over GBP/USD will be exerted by November's 13:30GMT US employment report. NFP forecast: 100/110k. The unemployment rate is expected to tick up to 4.5%, from 4.4% in October. Asian Central Bank demand at 1.9580 is currently propping cable, following its drop through 1.9600 to eight-day lows.

Further buy interest is tipped at 1.9545/50, with some stops noted sub-1.9540. 1.9550 was the December 2004 high. The perception is that the market remains long GBP/USD. Some of these long positions may be closed out later today, if November's US NFP number comes in better-than-expected. 1.9450 is a touted bear target south of 1.9540. 1.9600 (earlier absorbed bids) is now a rebound resistance level.

Upper obstacles include 1.9610 (today's Asian session base), 1.9640 (today's Asian session peak), 1.9650/60, 1.9680, and 1.9700. December's preliminary Michigan Sentiment index will be disclosed at 15:00GMT. Forecast: 92.0, from 92.1 in November. UK inflation, unemployment, earnings and retail sales data is due next week.

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