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18/5/2011 - The Current Market Sentiment

Discussion in 'Current Market Sentiments' started by fx-recommends, May 18, 2011.

  1. fx-recommends

    fx-recommends Content Contributor

    Aug 6, 2008
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    The sterling came under pressure after the release of The MPC's meeting minutes of May which have had no change of the members stance of voting again to come inline with the previous three meetings as Sentence has voted again for .5% hike and Dale and Weale voted for .25% hike while Posen is still looking for adding 50 Billions to the current 200 billion assets purchasing plan of BOE for stimulating the economy further but the other 5 members which forms majority of the members kept their silence again.
    The voting has shown again the persisting of the stagflation risks which capped the majority of the MPC's Members from taking a certain direction fearing of the emerging risks of the other.
    As we have seen recently rising of April UK CPI to 4.5% but in the same time, there was declining of April Manufacturing PMI to 54.6 from 56.7 in March while the market was waiting for rising to 57 and also declining of April UK Services PMI to 54.3 from 56 in March while the markets were waiting for rising to 57 too which show existing of the growth downside risks can grow up in the case of rising the interest rate by the required pace for containing the inflation upside risks which are seen by the BOE with little evidence to be prolonged referring to that the tightening in a slow pace may be appropriate for keeping up the household spending.
    We have seen also today mixed Labor report from UK as there was easing of April ILO 3 months to March unemployment rate to 7.7% from 7.8% in March while it was forecasted to rise to 7.9% but in the same time, we have seen rising of UK jobless claimant by 12.4k in April after 6.4k in March while the market was waiting for .5k.
    The cable got down after these data which does not suggest an expected tightening action by the MPC soon and it is now trading below 1.62 while its next supporting levels can be at 1.6140, 1.6089 and if it is to fall, the cable can meet another support at 1.6 psychological level then 1.5935 again and over a longer range, it can get back to 1.5744 and by god's will, in the case of ascending back, it can meet resistance at 1.5616 which has been reached after BOE quarterly inflation report last week and breaking it can lead to 1.6573 while is the lower high by this year high at 1.6744

    Kind Regards
    FX Market Strategist
    Walid Salah El Din
    E-Mail: mail@fx-recommends.com

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