Sterling is slightly firmer against the dollar today, and in three-day high territory against the euro. Fractionally above-forecast UK Markit manufacturing PMI data gave the pound a little upside momentum. The report came in at 51.5 in September, above the 51.4 median forecast, and while down from August’s 51.6 this was due to an up-revision from 51.5.
Recent UK data have been mixed but still corroborative of decent, if moderating, economic recovery. Sterling markets will need to see signs of life in inflation before getting too carried away with regard to their expectations for a BoE tightening, which is still seen as a good six months off. Cable clocked a five-month low in Asian trade earlier, at 1.5107, and has since lifted back to the 1.5140 area.
The exchange rate dipped through horizontal trend line support at 1.5150. Resistance is seen near the 10-day moving average at 1.5257. Momentum on the currency pair has turned negative with the MACD (moving average convergence divergence) index generating a sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from negative to positive territory confirming the sell signal.
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