Sterling Outlook (18-Feb-2009)...

Source: DailyFX.com

The GBP/USD opened in Asia around 1.4240 after a steady US session that followed a volatile London session. Unlike yesterday, the Asian session was extremely quiet today with little in the way of flows. The GBP/USD traded up to 1.4269 at one stage when the USD/JPY led the USD broadly lower, but there was little follow-through and the pairing settled back around the opening 1.4240 level for the balance of the session.

The EUR/GBP grinded a bit higher during the Asian session after a major bank put out a buy recommendation on the cross. The EUR/GBP traded up to 0.8845 after opening the session around 0.8835.

Sentiment towards the USD remains bullish and is likely to continue that way while the deep concerns over the global banking sector persist. The GBP is vulnerable to financial sector concerns and was one of the reasons some are recommending selling the GBP even at these depressed levels.

As we all have witnessed in the recent past, any relief rally in the banking sector can set off a vicious correction higher for the GBP/USD. UK CBI will be released later today.