The British pound is still trying hardly to have a place above 1.54 versus the greenback despite the improving of the risk apatite on today news of the possibility of increasing the lending capacity of the IMF to be $1 trillion after Legarde's calling yesterday for boosting the ability to it in the face of the current strong challenges facing the global economy as the pressure on the British pound has continued again today with the rising of UK unemployment in the three months to November by 118k to reach 2.68m which is the highest amount since 1994 pushing up UK ILO unemployment rate of the previous 3 months to November to be 8.4% which is the highest since 1995.
These data highlight the need of more stimulating efforts from BOE after keeping its assets purchasing plan unchanged in the recent 3 meetings after adding 75b Stg in last October to be consumed within 4 months.
The industrial sector is also not in a better stance as the data have shown recently declining of Nov industrial productions by 3.1% y/y while the market was waiting for -2.2% after decreasing by 2.1% in October and also Nov UK manufacturing production which came down by 0.6% y/y which the market was waiting for easing by just 0.1% after falling in October by 1% to assure what has come in the BBC's report last week of failure of the manufacturing sector to grow in the fourth quarter of last year.
From another side, the NIESR has expected growth in the 3 months to December by just 0.1% from 0.3% of the 3 months to November last week and also the British commercial chamber has indicated that the UK economy is looking in need for more than BOE stimulating plans now as the government should encourage the company borrowing too for helping the economy to recover.
The inflation pressure is looking easing in UK in the same time as what has been expected before by BOE as UK CPI has come down again in December to 4.2% from 4.8% in November from 5% in October after rising to 5.2% in September to lower the worries about the inflation upside risks of taking further easing steps putting pressure the British pound from another side.
God willing, the cable is expected to face a resistance at 1.5523, in the case of maintaining a place over 1.4507 and the breaking it can lead to a higher resistance at 1.5667 before 1.5778 while its way down is expected to met by supporting level at 1.5231 whereas it could rebound by the end of last week after S&P credit downgrading of 9 EU countries and getting below it can open the door for facing another supporting level at 1.5123 before the psychological level at 1.50
Kind Regards
FX Market Strategist
Walid Salah El Din
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