Cable rallied to highs just shy of 1.9570 on the back of the quarterly BoE inflation report's touting of a tightening bias, and an inflation warning from Mervyn King. The BoE Governor told a press conference that the UK CPI outlook is "highly uncertain" (Reuters).
GBP/USD also notched highs just shy of 1.9570 on Monday. Good size stops reportedly reside above 1.9570. 1.9538 (early Europe high) is now a pullback support point. Lower props include 1.9510 (former stop-loss level), 1.9495 (today's Asian session peak), 1.9455 (today's Asian session base), 1.9420, and 1.9400. German name demand for EUR/GBP, and good size EUR buying from a UK clearer, helped buoy the cross to a European morning five-week peak of 0.6717. Small stops are tipped below 0.6690. Further stops are noted under 0.6680. US January retail sales will be disclosed at 13:30GMT.
Forecast: +0.3% m/m, ex-autos +0.4% m/m. Ben Bernanke will deliver part one of his semi-annual US monetary policy testimony from 15:00GMT.
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