Pound declines versus the dollar

After touching $1.68 yesterday, sterling has dropped back, hit by weaker UK construction output figures.

Yesterday’s Bank of England decision was one of the dampest of damp squibs – i.e. no change for the 33rd successive meeting. Construction output for February was released this morning, and saw a decline of 2.8% versus the expected drop of 1.3%.

Having seen $1.68, however briefly, the presumption is that we will eventually witness further gains in GBP/USD. However, the currency was sharply overbought earlier in the week, and we’re now witnessing the unwinding of that move.

In the short term I expect to see support enter the fray around $1.6720, with the rising 100-hour moving average hovering here as well. The 200-hour is also continuing to rise, which would suggest support close to $1.67 if there is a sustained bout of risk aversion in the coming week.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.