Cable fell to a one-month low of 1.9438 following the 09:30GMT disclosure of January's much steeper-than-expected decline in UK input producer prices. These tumbled by 2.0% m/m and 1.7% y/y, against forecast falls of 0.7% m/m, 0.2% y/y. The large input PPI drop is good news for doves arguing that the peak of the UK base rate tightening cycle has already been reached.
Softer-than-expected UK inflation figures at 09:30GMT tomorrow, and a relativelydovish BoE inflation report on Wednesday, could spur further GBP selling. Annualized CPI is expected to tick south from an 11-year high of 3.0%. Touted support points/bear targets south of 1.9438 include 1.9427 (Jan 12 base),1.9410, 1.9385, 1.9317 (Jan 10 floor), 1.9280, and 1.9260 (Jan 8 low). 1.9467 (Friday's NY session base) defines the rebound high from 1.9438.
Upper obstacles include 1.9480 (today's Asian session low), 1.9500, and 1.9520. This week's key US event risk is Bernanke's monetary policy testimony to Congress on Wednesday and Thursday. US Treasury Secretary Paulson says a strong USD is in the interest of the U.S (FAZ/Reuters).
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