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Sterling gains as focus turns to Bernanke

Sterling gains as focus turns to Bernanke

The weakening US jobs market is impacting on consumer confidence as retail sales unexpectedly declined for the third consecutive month in June. This latest release is a sign that the US economic recovery is losing momentum and will put pressure on the Fed to provide additional stimulus to the economy.

On the FX markets, growing speculation that Bernanke’s testimony to Congress this afternoon will signpost further policy stimulus has encouraged investor risk appetite. While EUR/USD has picked up over half a cent breaking $1.23, Sterling has been the main beneficiary with GBP/USD trading a cent higher this morning above the $1.5650 level. GBP/EUR has held steady above the 1.2700 interbank level although it has slipped back from the peak 1.2750.

Later we have the rate decision form the Bank of Canada but no change to the 1% mark is expected.

The market ‘looks forward’ to the Bank of England minutes tomorrow to gauge the likelihood of further stimulus or perhaps even a rate cut…

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