Sterling yesterday touched lows of 1.897 on cable, despite a small spike during the day off the back of recent data on increased inflation; this most probably prompted speculation of a rate hike by the BoE, which in turn led to investment in GBP. It was, however, short lived, and cable currently trades at just over 1.9. On the continent, the Euro continues to suffer from the bullish greenback, with EUR/USD having lost over ten cents within a fortnight.
This can be attributed as much to weaker European consumer confidence and slowing exports from Germany as it can to recent positive statistics coming from the US . Meanwhile, the Dollar itself remains in good shape, although the Bull Run seems to finally have been checked at its current level (currently on 1.493 against the Euro). Although 1.5 has proven to be something of a psychological trading barrier for investors, investors might also have been deterred by a recent report from JP Morgan Chase, one of the banks hardest hit by the 'credit crunch', revealing a $1.5 billion write down.
Looking ahead, at the time of this report the BoE is releasing its quarterly inflation report; Mervyn King's comments on slowing growth are prompting a Sterling sell-off, and cable currently trades at 1.886. Later in the day, at 1330, all eyes will be on the release of retail sales figures from the US , which will be a crucial determining factor in assessing the confidence of US consumers. Analysts are predicting a figure unchanged from last month's; if the actual figure comes out higher or lower, the greenback could be in a for a turbulent afternoon.