Sterling hits one-month high versus dollar, construction data in view

Tue Dec 4, 2012 2:51pm IST

* Sterling rises past stops to hit one-month high vs dollar

* Long positions could be threatened by soft UK data

* Real money investors cited as buyers of sterling

By Philip Baillie

LONDON, Dec 4 (Reuters) - Sterling struck a one-month high against a broadly weak dollar on Tuesday on buying by long-term investors, but risked giving up some of those gains if UK construction data disappointed.

A Reuters forecast pointed to a drop in the construction purchasing managers' index (PMI) to 50.5 for November, from 50.9 the previous month. The data was due at 0930 GMT.

A figure above 50 indicates expansion and traders said some long sterling positions could be unwound if data showed that the sector contracted last month.

Sterling hit a one-month high of $1.6124, triggering stop-loss buy orders just above $1.6120 with reported option barriers at $1.6150 likely to check near-term gains.

The pound was flat against the euro, with the single currency at 81.10 pence, just off the five-week high of 81.325 it posted against the pound last week.

"We are not expecting any major moves unless the construction PMI is wide of expectations," said Richard Driver, analyst at Canton FX. "But broadly speaking we see technical resistance above $1.62."

Attention will stay on UK Finance Minister George Osborne's "autumn statement", which he is due to present to parliament on Wednesday. There is speculation that he is likely to miss his debt and growth targets, raising the risk that Britain could lose its prized triple-A credit rating.

"We tend to be seeing more of the same from Osborne, it is probably going to increase speculation around the AAA credit rating. Growth is going to be poor in Q4 which is bringing the rating agencies into play," Driver said.

"More of the same is not necessarily good for sterling."

Earlier, data showed British retail sales edged up in November, though by less than analysts were expecting. The improvement followed a solid reading from November's retail sales index from the Confederation of British Industry.

Still, overall activity in the economy remained sluggish as a UK manufacturing PMI survey on Monday showed the sector contracted in November.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage