Currency Forecast - Sterling Vs. American Dollar - 19/05/09
Last week was relatively uneventful as sterling and the dollar battled it out in a three cent trading range between 1.5050 and 1.5350. Economic data was indecisive, but a couple of qualitative reports give us some room for optimism. The Rightmove house price survey reported a rise in asking prices on Monday, and last week's report from the Organisation for Economic Cooperation and Development cited the UK as one of the countries most likely to emerge from the downturn soonest, while the US is likely to lag.
That sentiment, along with a fundamental shift in investors' perceptions of the US currency as a safe haven are helping the sterling/dollar rate hold on to recent gains. This week's rally takes us to new highs for 2009, and there is limited technical resistance until the December high at 1.5723. So the technical outlook is still positive, and we are looking for further upside. Clients with dollar requirements should consider placing a stop order below 1.50 in case this rally unravels though.
Currency Forecast - Sterling Vs. American Dollar - 07/05/09
Sterling has been making consistent headway against the US dollar over the last two weeks as the stock market rally spurs an increase in investor risk appetite. Funds are gently moving away from the dollar in search of higher yields, with the result that the dollar is sliding fastest against those currencies that still offer a decent rate of interest. Those include the Aussie dollar and the Rand. Sterling has also been relatively buoyant on economic data that has been outperforming equivalent measures in the US and Europe.
The pound also managed to break above the April high at 1.5068 yesterday, making a new high for 2009 this morning. We've backed off from the day's highs now, and we have not yet broken completely free of the key technical resistance around the 1.50 level, so caution is still advised for dollar buyers. If we can maintain a foothold above 1.50, there is scope for a further rally up towards the next key technical barrier at 1.5374.
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