The pound came under fresh selling pressure from today's European open, with news that FirstGroup is to buy Laidlaw for $3.6bn cash (FT website) helping weigh. A UK clearer reportedly sold a lot of GBP, with model funds joining in after cable's break below 1.9550. Swiss name selling of GBP/CHFwas also noted.
M&A-flow was mooted as the cause of the GBP/CHF selling. GBP/USD stops below 1.9483 (Jan 31 low) were tripped, en route to a 4-week low of 1.9459, after the 09:30GMT disclosure of December's higher-than-expected UK trade deficit. This came in at GBP 7.142bn. It was forecast at GBP 6.9bn. Sterling's recovery rally from 1.9459 ran into resistance at 1.9500.
Above figure obstacles include 1.9525, 1.9550, 1.9575, and 1.9600.Touted bear targets south of 1.9459 include 1.9427 (Jan 12 low), 1.9410, 1.9317 (Jan 10 base), 1.9300, 1.9280, and 1.9260 (Jan 8 floor). UK January inflation data is due next Tuesday, with the BoE quarterly inflation report published next Wednesday. Centrica has announced large gas and electricity price cuts from March 12 (FT, p3).
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