Cable stalled just under the year’s high, after the rise in Asian trading which saw sterling traded to 1.6660, and just under the high this month and for the year at 1.6662. Seen supportive for sterling was the improvement in the GfK consumer confidence data released earlier today at -25. The surge in oil above $73 is viewed as a USD negative and also benefits so-called “petro” currencies such as sterling. Today’s sterling gains belies further negative outlooks on the UK economy that emerged on Monday including the warning from the OECD that the government must impost hefty spending cuts or risk a deficit that rises to 90% of GDP and well above the government forecast of 80%. In further negative data, the Bank of England lending figures shows the banking system remains frozen, with net mortgage lending in May at record lows. For sterling, a rejection of the 1.6662 level risks a retreat in sterling, possibly back to the base of the 1.6200-1.6600 range that has held for much of the month.
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