FX afternoon update - Sterling holds above support against the dollar

By Michael Hewson

Date: Wednesday 10 Mar 2010

Sterling continued to come under pressure today testing support against both the Euro and the US dollar, but has so far managed to hold both levels as the dollar has slipped back.

The key levels on the cable are at 1.4850, the 61.8% retracement of the up move from 1.3500 to the highs at 1.7045, and against the Euro at 0.9150, the recent range highs.

The announcement of a UK budget date of 24th March could well underpin the currency until then on the basis that Alistair Darling may well steal the Tory's clothes, and be more transparent about possible future cuts, and fire the starting gun proper for the lead-up to the general election.

The Euro was also buoyed by comments from Romano Prodi, the ex Italian Prime Minister who said in an interview in Shanghai "For Greece, the problem is completely over," which you could argue is a little on the optimistic side. The single currency should find resistance above 1.3710, however if it does break higher, it could find 1.3800 a difficult nut to crack.

Stocks have continued to rise as risk appetite has improved, while the yen has continued to weaken against the dollar heading towards the 200 day MA resistance at 91.90. It needs to consolidate above the recent range highs around 90.70.

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