Not a very good morning for cable and sterling in general, when all said and done. Cable rallied from 1.4565 to around 1.4585/90 just after the release of the GDP data, but its all been downhill ever since, cable presently at 1.4380.
There doesn’t seem to have been any one paticular reason for the abrupt turnaround, rather a number of factors coming into play. Cable was apparently sold aggressively by two UK clearers up in the high 1.45’s with an Asian central bank also joining in the fun. A European sovereign apparently had a decent month-end buy interest in EUR/GBP.
The GDP figures, while very slightly better than expected, still showed the UK stuck, mired in recession. The head of sovereign risk rating at S&P came out and said there’d be more sovereign downgrades this year than upgrades, raising the spectre (with some folk) that the UK could be in danger of losing its AAA rating. Finally BOE’s Sentance came out and said there could well be more rate cuts in the offing, but that they’d likely have limited effect on cost of borrowing in the real economy. He’s an advocate of quantitative easing. And there we have it.