The cable has come under pressure again after the release of UK manufacturing productions of March which have come unchanged from February while the market was waiting for increasing by .5% from .9% in February and also the industrial productions of March have come weaker than expected easing back by 1.2% while the market was waiting for increasing by .4% from .3% in February and these weak data come after the recent declining of UK PMI manufacturing index which has fallen in March to 57.1 from 61.5 in February while the market was waiting for 60.9 which shows that there can be harder times in the case of further rising of the commodities and energy prices.

The cable has been boosted this week by the rising of UK PMI service index of March which rose to 57.1 from 52.6 in February while the market was waiting for just 52.9 and it was 53.5 in January from 49.7 in December which shows that there is improvement in the performance of this sector and from another side the greenback was under pressure across the broad as the market is pricing now on the Fed's believing that the underling inflation over the medium term is expected to be stable despite the rising of the oil and commodities prices which can be transity suggesting that there can be further easing period of keeping its easing policy undermining the greenback which is looking suffering this week.

The market is waiting now for the MPC meeting decision after the recent MPC meeting minutes had shown that the inflation can reach to 5% over the medium term while there is no clear view about the economic growth in the first quarter of this year yet as it is still too early to be predicted while the voting of the members was the same as the recent meeting as Mr. Dale has given his vote again to hike the interest rate by .25% like Mr. Martin Weale and Andrew sentence has repeated his calling for hiking by .5% while Possen was the same only vote for increasing the buying assets plan by another 50b Stg while the other 5 MPC voting members including BOE president Mr. Mervin King preferred leaving the interest rate unchanged at .5% keeping BOE 200b Stg buying bonds plan unchanged as taking any direction will cause emerging of the other direction risks as we have seen recently UK Q4 GDP quarterly final reading showing shrinking by .5% and in the same time rising of UK Feb CPI to 4.4% yearly which underpinned the cable to reach 1.6399 and now the cable is expected to face this same level by God's will, if the MPC could get over its fear of the downside risks facing the economic growth by hiking the interest rate as what is pricing currently in the market is the inability of the BOE of taking any direction because of the stagflation pressure which has been very remarkable in the recent release of confederation of British industry's monthly retail sales growth poll of February which has fallen to 6 from 37 in January to ensure the market worries about the growing pace of the demand which is moving the growth up and in the same time the figure of the selling prices inside the retail sales sector has shown strong rising from 43 in January to 73 in February which shows the need of tightening too.


Kind Regards

FX Market Strategist

Walid Salah El Din

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