A better day for sterling versus the dollar, as cable inched up to the $1.30 handle after the UK’s official statistics office said inflation crept up to 0.6% in July from 0.5% in June. This stemmed losses that had seen cable drop below $1.29 on Monday.
Sterling was flat versus the euro as the pound was slightly higher against its major peers, recording its first session gain in two weeks.
But sentiment is still pretty bearish. Net shorts at the CFTC are at the highest in years and JPMorgan says cable should slip to $1.25. More data out this week will offer fresh impetus – retail sales, average earnings and employment figures on the way.
Sentiment towards the greenback is also looking decidedly bearish. USD/JPY plunged below the 100 mark but quickly recovered after William Dudley, the New York Fed president, said the FOMC could still vote to hike interest rates in September. The dollar was still down almost 1% against the yen as economic reports disappointed. All eyes on the FOMC meeting minutes due out tomorrow at 14:00 (ET).
So what’s your take on these two pairs? Will the pound have further to go? When will dollar bulls take charge again? Trade your view at ETX Capital.