Broad based Sterling selling extended yesterday although we have yet to break out of these recent short-term ranges. The Jersey fishing dispute has calmed somewhat as diplomacy looks to be the key going forward. The disastrous UK local election results for Labour including the Hartlepool by election has given some stability to Sterling this morning as buyers return. Against the Dollar, we are currently holding above key resistance of 1.3900 (now 1.3920). Key resistance against the Euro remains at 1.1600. Investor sentiment generally remains bullish for the Pound in the medium term. As expected, the Bank of England left interest rate policy unchanged yesterday and remain confident of an economic recovery supported by the successful vaccine program.
As the Down Jones index of traditional stocks continues to hit record highs, the USD remains under pressure. Investors are however cautious as technology stocks (NASDAQ) remain somewhat sluggish. Nevertheless, European stocks remain buoyant supporting the view of a weaker US Dollar scenario (less reason to hold Dollars for safe-haven purposes). The latest U.S. non-farm payroll data will be released later this p.m.
The US Dollar has seen selling interest develop again since Europe opened for business, as the Euro looks to test the key resistance of $1.2100 (currently 1.2075).