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Sterling struggles to recover
Expectations that UK interest rates have peaked have been intensified by the comments yesterday and this will tend to undermine Sterling in the short term, although the housing data today was slightly stronger than expected. There is the risk of a fresh push towards 0.6880 against the Euro, but the Euro will probably also need to break higher against the dollar to allow gains beyond this level. Short Sterling positions offer little value below 1.7920 against the dollar for now. Sterling has weakened sharply over the past 24 hours due to fresh speculation that the UK economy is slowing. Sterling weakened to 1.7950 against the US currency and also dipped sharply to 0.6860 against the Euro. Data yesterday was week with the CBI retail sentiment survey weakening to an 18-month low of -9 while consumer confidence also dipped to -7 in September from -5. The comments from MPC member Barker caused most damage for the currency as she stated that the central bank could be nearly done with interest rate increases. This has increased speculation that several bank members will vote against a further increase in interest rates. The Nationwide house price index was slightly stronger than expected with a 0.2% monthly increase and a 17.8% increase over the year. Sterling failed to benefit from the data, suggesting that Sterling sentiment has deteriorated again after a brief respite seen from late last week. Analysis supplied by