The pound is coming back to earth after the BOE stuck to a conventional rate cut and steered clear of any “novel” approaches to liquidity injection at today’s MPC meeting. From early New York highs at 1.5370 we’ve slipped back to 1.5120, not to far above the 1.51015/10 levels that constrained the pound until the BOE uncertainty was ended this morning by the MPC.Should the pound dip further, 1.5085 and 1.5020 are support levels below the market.
As the pound cools, the euro has come back to earth as well. The news that Commerzbank required a 25% stake being taken by the German government has helped remind dealers that risk is still very grave in the financial sector, especially in Europe where the banks are bigger than the governments. EUR/USD support lies at 1.3665 near-term.
