The British pound is still depressed by the current expectations of further close interest rate cuts. The cable could not join any progress of the single currency versus the greenback which had weak consuming data and manufacturing data and the disappointed US labor report of December which has shown and increase of the unemployment to
5% and just 18k added jobs of the non-farm-payroll to highlight the need of further interest rate cuts and the fed's need to pay further attention to the growth more than it does. In this same time the interest rate in Euro zone is expected to be kept in the near term.The cable could not hold above the 2 psychological levels. a lower top at 2.0575 under the trend line resistance extended from 2.116 to 2.084 has put further downside pressure and the break of 2.0177 could increase its momentum. The trend can continue and the next target is now august low at 1.965 where the ascending channel has begun.
Also the Japanese yen can gain from this interest rate outlook differential tightening, the mistrust in the stock market amid the crediting problems, the slow down of the US economy persisting, the decline of stock market, the risk aversion and the carry trade unwinding sentiment.
The continued pressure on the British pound has accumulated on an animus decision to cut the interest rate .25%. The market has found the minutes release dovish and the decision was not expected to be
9:0. The minutes open the market anticipation of another cut next month which was not discounted yet.By God's Will, The gold rates can keep its gains as the current market prospects of further interest rates cutting ahead and further upside inflation risk impact resulted from the high oil prices amid the current central banks tries to ease the global liquidity concerns by injecting much more funds into the credit financial markets which can add to the gold value. The actions which can revive the stability of the crediting market but the recent signs of slowing growth can increase the expectation of a stagflation case as the recent US high inflation rates which reached its fastest pace in over two years last November which can add to the precious metal value. .
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FX Consultant Walid Salah El Din Mob: +20 12 465 9143 E-Mail: snipped-for-privacy@fx-recommends.com