The market is not impressed with Darling’s pre-budget report, apparently, and investors are voting with their feet. GBP/USD has fallen back to the 1.6215 level, well below the 1.6250 zone that supported the market for so many months. This morning’s lows at 1.6165/70 are the next target for the pound.
Risk aversion is rising once again this morning as downgrades, rumors of downgrades and credit in general comes back to the fore. Under that scenario, the dollar tends to rally, as last year’s price action at the height of the credit crisis underscores.
