With the rising of the market risk appetite again, the sterling could keep its place above 1.61 versus the greenback after the debt data which has shown rising of the total debt in March to Stg 1.02 trillion as the governmental deficit has rose in March excluding the banking support by Stg 18.2b and including it by Stg 15.87b from Stg 9.938b in February pushing the total debt to GDP ratio to 66% excluding the financial interventions highlighting the threat of credit downgrading again and the need of avoiding it.
As Fitch credit rating agency has changed previously last month the outlook of the British long term debt to negative from stable which means that there is 50% chance to lower its AAA rating in the coming 2 years by God's will and it has said that this step has come from its side because it has addressed very limited fiscal space to absorb further adverse economic shocks amid the current debt crisis risks which weighing down on the economic growing pace of the Euro zone while the British economic growth is still struggling growing up hardly by just 0.1% in the first quarter of this year quarterly from 0.3% in the last quarter of last year.
The British pound has been supported recently by the release of the MPC's meeting minutes which have shown BOE's worries about the inflation outlook because of the energy prices and the substantial contribution of BOE's assets purchasing programs in raising the prices which has shown rising yearly in March over the consuming level by 0.3% y/y from 3.4% in February and this was the first rising after five consecutive drops since September 2011 when UK CPI formed its peak at 5.2% yearly and these minutes have shown also have shown that there was only one voting from Miles in favor of increasing the assets purchasing plan of BOE by Stg 25 Bln to Stg 350 Bln against 8 voters for making no change as Posen has finally joined the majority which is preferring keeping it at Stg 325 Bln.
From another side, the British pound could find strength b y the end of last week by the release of UK retail sales of March which have rose by 3.3% y/y while the market was waiting for rising by just 1.4% from 1% in February.
God willing, in the case of rising, the cable can meet now resistance at its recent top at 1.6164 which has been formed by the end of last October and breaking it can open the way for higher resisting levels at 1.6206, 1.6251, 1.6332, 1.6452 and 1.5670 before its previous top at 1.6616 while the way down can be met by psychological support 1.6 before other supporting levels at 1.5892, 1.58, 1.5769, 1.569, 1.5515, 1.5449 and 1.5319 before 1.5231 again.
Kind Regards
FX Market Strategist
Walid Salah El Din
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