Sterling has further to fall say analysts
London, March 1, 2010
Sterling, which tumbled to multi-month lows against major currencies on Monday on a flagging economy and political uncertainty, has further room to decline, particularly against the euro, technical analysts say.
Analysts said euro/sterling was in a bullish trend after the pair closed last week above the 55- and 200-day moving averages. On Monday, the euro broke through resistance at 90.10 pence, a 50-percent retracement of the October 2009 to January 2010 sell-off, and extended gains above the December 2009 high of 90.55 pence.
Analysts see a break above that level clearing the way towards 92.30/40 pence.
"Sterling is in trouble and we suspect it will fall further in the coming weeks," analysts at Barclays Capital said.
Analysts at Commerzbank eyed a long-term target of a 13-month support line at 92.28 pence after the euro's break of the December 2009 high.
The euro rose to a four-month high against the pound of 91.50 pence by midday in Europe on Monday. It was last at 90.76 pence, up 1 percent on the day.
On a trade-weighted basis, the pound fell to 76.5, its lowest since late March last year.
Against the dollar, analysts saw tentative support at the $1.4855 level, the 61.8 percent retracement of the 2009 rally. Below that, Societe Generale said the pound could find tentative support at $1.4755. Others saw a further test of $1.4660, near its March 2009 high.
Sterling was last at $1.4880, down 2.4 percent on the day, after dipping to $1.4781, its lowest since early May last year. - Reuters