Sterling steadied against the euro on Friday in flow driven trade, supported by institutional demand, but concerns about a fragile UK economy and a negative technical picture weighed on sentiment. The pound slipped back against a firmer dollar in thin trade as worries over rising civil unrest in Egypt fuelled worries over Middle Eastern countries in general, prompting safe-haven demand for the greenback and US Treasuries.
The UK GfK NOP survey of consumer confidence fell 8 points in January to -29, the biggest drop since 1992 and the lowest reading in 22 months, hit by a rise in value-added tax and looming public spending cuts. After failing to test a 2-1/2 month high of 86.72 pence hit on Wednesday, however, the euro gave up its gains to trade close to flat with traders reporting selling by real money accounts and a US bank in choppy trade ahead of the weekend.
"Sterling was sold this morning aggressively on a euro/sterling fix move which was rumoured to be substantial. Since then euro/sterling has been slammed back lower, taking out stops below 86.30," said Richard Wiltshire, FX broker at ETX Capital. The euro was steady against the pound in afternoon trade at 86.16 pence, with the technical picture looking positive for the euro while it traded below its major daily moving averages.
Against a broadly firmer dollar, sterling was down around 0.5 percent at $1.5840, in the middle of the week's $1.5750/1.6018 range. The dollar index was up 0.5 percent. It had skidded lower on Tuesday following a shock contraction in fourth quarter UK gross domestic product.
Comments
Comments are closed for this article.