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Sterling in stable above 1.51 area

Monday, Jan 19 2015
It is a steadier Monday's session for Sterling as there is no data releases from the UK. Though, slowdown in British economy is obvious, and BoE is forecasting slower GDP growth in fourth quarter, all figures show that UK is still in a phase of expansion, unlike Eurozone. However, since UK is part of EU, slowdown in Eurozone economy could have negative impact on UK as well, at least in trading activity. 
 
After last week's data showed falling trend in inflation with only 0.5% increase Sterling had mixed reactions to that. However, BoE expects that inflation will turn to negative, but sees benefits in it in the form of incline in consumer spending. While BoE governor Mark Carney pointed out that falling oil prices will hurt the Scottish economy, he noted that the UK as a whole will benefit. 
 
Pair could go through rebound, but until we break above 1.53 handle it is hard to place any larger buying bids. If we break above this area pair could go all the way to 1.55 handle where we expect first major resistance. On the other hand 1.50 handle offer plenty of support at the moment that goes all the way to 1.48 level, so we have no interest in selling this pair at the moment. 
 
Pair is currently being traded above 1.5140 level. Pair is likely to find support around 1.5080 and resistance above 1.5230 level. We can expect steadier rest of the session with US banks being closed in observance of Martin Luther King's Day.
More in this category: « Will euro head towards 1.10 handle? ECB will take the decision to buy sovereign debt on Thursday »

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