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Sterling still in a downtrend

Monday, Apr 13 2015
It is an uneventful Monday's session for Sterling with no major data releases both from UK and USA. Traders are still being influenced by Friday's weaker than expected UK Industrial Production data, which showed 0.1% increase, missing forecasts on 0.3% incline. However, Manufacturing Production was in line with market forecasts showing 0.4% growth. What is also adding extra pressure to Sterling are elections scheduled for May.
 
With the U.K. General Election just over four weeks away, investor hedge protection is also taking its toll on the Sterling. One possible outcome of next month’s election would be a Conservative majority and only a slight swing to the right from the electorate would make such a result a reality. Although this would give the UK economy clear stewardship, it may not be a good result for the Pound Sterling.
 
Furthermore, Britain could fall into deflation this week for the first time in more than half a century, the result of an escalating supermarket price war and falling energy prices. There is no reason to panic, according to the Bank of England and City analysts. They claim any period of UK deflation is likely to prove temporary, unlike the deflationary spiral in Japan, where people have lived with falling prices for two decades.
 
Sterling is currently being traded slightly above 1.46 handle. Pair is likely to find support around 1.4550 level and resistance above 1.4650 area. There will be no major data releases in the rest of the session.
 
 
More in this category: « Aussie sharply down after China's Trade Balance figures Euro little changed in a steadier morning part of the session »

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