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Forex: Further highs for cable

Thursday proved to be a steadier day for FX. The main standout was sterling where the push higher that was instigated in the wake of last week’s election results continued, cable briefly touching the 1.58 level before pulling-back to the 1.5750 area. This came despite the noises from the Bank of England earlier in the week, the latest downgrades to growth forecasts suggesting that rates are likely to remain on hold for the remainder of the year. In the Eurozone, we saw equities recover in Europe, but in the wider picture they have continue to divergence and underperform the US as bond yields have climbed.

The events scheduled for today are generally second tier data releases. The US sees Empire Manufacturing data at 12:30 GMT, together with Industrial Production and Michigan sentiment data (at 13:15 GMT and 14:00 GMT respectively). This is a Friday though, so volatility can be a little higher than normal. In the wider picture, the dollar has continued its overall downtrend, with the single currency and Swissie the main beneficiaries from this on the majors this week. Immediate resistance for EURUSD is seen at 1.1445, with the 1.15 level naturally in focus should this level be breached.

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