From FXCM latest GB£
[FXCM GBP/USD COMMENTS]
The reversal of rate hike expectations continued to fuel gains in the British pound. The latest release from NTC Research supports the bullish growth forecasts revealed by Chancellor Brown last week. NTC Research, which is a private economic research institute, reports that its UK Leading Indicator posted a reading of 101.3, which is the highest level for the index since July 2002. This is the tenth consecutive month that the index has been improving, which according to the NTC, suggests that the UK economy is set to strengthen throughout 2004. There are five components in the index, which includes new housing starts, new car registrations, money supply data, consumer credit figures, job vacancy ads and equity price movements. The biggest contribution to the gains in February came from a sharp surge in new car registrations, which the NTC says reflects "the continued willingness amongst consumers to make significant credit purchases." Household spending remains one of the MPC's most significant concerns, which means that today's data supports the market's expectations for a rate hike in April or May.
[IFRMARKETS GBP/USD COMMENTS]
[20:57 GMT March 22] Cable rallied to 1.8490/00 over the US session as
geopolitical concerns rose in the wake of the Israeli killing of a Hamas leader.
However, semi-official selling capped both Cable and EUR/USD with Sterling
retreating to 1.8462/67 but still near the highest levels in two weeks. A
hawkish outlook on UK interest rates from Ernst & Young's Item Club in the
Sunday Times is helping underpin the pair.
1.8525 provides a bull target, with the level marking a 50% Fibo retracement
point of the fall from 1.9140 (Feb 18 high) to 1.7910 (March 12 low). Support is
pegged at 1.8400 (last Thursday's high) and 1.8370 (last Friday's high). EUR/GBP
remains heavy, easing to 0.6675 with yield expectations a factor, but some
dealers note disenchantment with the EUR growing and weighing on the cross.
UK event risks, which may impact the pound over the course of this week
include Wednesday's budget testimony to a Treasury Select Committee by
Chancellor Brown, and Thursday's explanation of last month's quarterly inflation
report by MPC members, including BoE Governor King. --(rs)