Previous session overview

The British pound is leading the charge against the retreating U.S. dollar Wednesday as investors shift back toward more risk-sensitive currencies.

The pound reached a session peak of USD1.6294, its highest level since Dec. 17, after Bank of England Monetary Policy Committee member Andrew Sentance said in an interview with the Guardian newspaper that the U.K. central bank is coming to the point at which it will have to pause bond purchases and assess their impact on the economy.

The pound spurred a move higher by the euro, enabling it to break above key resistance and set a new high for 2010, said analysts.

The euro reached a high at USD1.4580, its highest level since Dec. 16.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 76.859 from 77.011.

Market expectation

Major currencies remain firmly inside recent narrow trading ranges; the dollar could find more support later in the day if the latest Beige Book economic report from the Fed suggests more widespread support for rate increases.

EURJPY took a hit for trade to JPY132.50 area currently as this pair adds to downside pressure on euro-dollar which is now approaching USD1.4500 area, traders of each pointing to the other as leading the move. Backdrop of weaker US stocks is providing fodder for the "risk-off" camp.

The Pound corrective pullback off extended rally high sat USD1.6295 met demand interest placed between USD1.6255/50 which has so far kept rate buoyed. Cable currently trades around USD1.6260. Offers remain in place between USD1.6295/00, a break to open a move on toward USd1.6340/55. Above here and technical traders have USD1.6475 as a suggested target. Support USD1.6250 ahead of USD1.6240/30, a break here to dent current bullish tone.

EURGBP retains a heavy feel, with recovery so far remaining shallow with focus remaining on the downside and support at stg0.8915. Stops have been noted on a break below, which if triggered to open a deeper move toward stg0.8895/90. Resistance remains at stg0.8950 ahead of stg0.8965/70.

Disclaimer: the data made available by Dukascopy (Suisse) SAis for informational purposes only. Publication of this data by Dukascopy (Suisse) SA does not constitute provision of investment advice and Dukascopy (Suisse) SA assumes no responsibility with regard toany information, forecast or recommendation herein contained and assumes no responsibility with regard toany losses resulting from any activities conducted the basis of this data, including any investment decisions.

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