UK clearer demand helped inflate cable to an intra-day high of 2.0036 in early European trade. Demand at 1.9990 based the subsequent pullback. Some stops reportedly reside below 1.9985 (today's Asian session base).
April's much better-than-expected CBI retail sales balance underpins the expectation that the UK base rate will be upped by 25bp to 5.5% next week (May 10) and hiked by another 25bp to 5.75% in H2, with risk to 6.0%.
2.0045 (last Friday's high), 2.0062 (double-day top, last Wednesday and Thursday) and 2.0095 (Apr 19 peak) are resistance levels north of 2.0036.
Outgoing UK PM Blair will make a "definitive" statement on his future next week (GMTV/Bloomberg). Barring a political earthquake, UK Chancellor Brown will succeed Blair as PM this summer. There are UK local elections this Thursday.
April's US ISM manufacturing index will be disclosed at 14:00GMT. Headline index forecast: 51.0. Prices paid index forecast: 67.3. US March pending home sales will also be revealed at 14:00GMT. Forecast: +0.2% m/m. Fed chairman Bernanke is due to speak at 15:00GMT.
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