The British pound has found support today from the release of the MPC recent meeting minutes which have shown that the decision of holding the buying bonds plan unchanged at 175 Bln Stg was unanimously an unanimous. The sterling was under pressure in the beginning of this week before finding support above 1.61 versus the greenback negatively impacted by the recent comments of the BOE president Marvin king in front of the parliamentary committee last week when he said that further deposit interest rate cut might be a useful supplement and the market was waiting to have a hint in these minutes release to a probability of cutting the interest rate further in UK but the minutes have surprised the market with no reference to this probability and holding the BOE plan unchanged with no adding by an unanimous decision. The minutes have shown that the current recession conditions have eased and downplayed the probability of seeing an inflation falling below 1% referring to the possibility of having a recovery in the assets prices in the near term and we have just seen last week August UK CPI y/y coming up by 1.6% while the market was waiting for just 1.4%. the minutes totally was positive to the pound from many sides and it was not discounted in the market which sparked a British pound buying across the broad even versus the single currency which is still facing difficulty to stand above 1.48 versus the greenback as the British pound looked much attractive in holding than before versus the greenback instead of the single currency.
We are waiting now for the Fed's interest rate decision and its US economic assessment later today. It is widely expected to have an improving of the recent evaluation of the fed and reference to the recent expansion signs of the economy which need to be reinforced by the market confidence to get the economy out of the recession pressures which have been seen easing in the recent months.
As the crisis now is looking over, the pressure came back again of the greenback from the increased risk appetite of the investors who are hoping in this waited recovery to push the prices of the stocks, the commodities and the energy up again causing an inflation pressure in the future which bid the gold above 1000$ versus the current weak greenback which is waiting for a holding back of the current taken easing steps by the Fed at anytime may find a clue or a reference in the fed's assessment today which can push it higher and find buyers again but this is looking not before a realized improving of the US labor market conditions as the Fed's president has declared nearly a month ago when he has indicated that the worst of the credit crisis is looking behind of us for first time and last week he has said that we are likely at an end of this technical recession but he was still cautiously optimistic when he was still talking about the current labor market conditions and the need of the confidence currently to spur back the lost jobs.
Best wishes
FX Consultant Walid Salah El Din E-Mail: snipped-for-privacy@fx-recommends.com