As matters in Greece continue to worsen, the UK is also showing signs of strain as it prepares to make its own case to the Eurozone for more powers in relation to curbing immigration and European human rights laws. The inflation rate is now languishing in negative territory, suggesting that there will be hardly any change in monetary policy in the near term. This could be the cause of the correction against the US Dollar, after the initial bull rally. It will be wise to keep a close eye on Sterling, the alternative “safe haven” currency whenever the USD is in trouble. As most of the market is anticipating a rate hike in the US, the sentiment is clearly pointed to the dollar. The futures market continues to see an increase in Sterling net speculator positions as the market declines. This can be a sign that a recovery may be due.
Sterling continues to trade very close to its 55 day Exponential Moving Average
GBPUSD Daily Chart