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USCR Agrimonetary Updates |
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| USCR Agrimonetary Update 23rd March 2004 |
Sterling Rallies on Continued Interest Rate Rise Expectations
Sterling moved up against the €uro today underpinned by the prospect of another UK interest rate rise in the not too distant future. Analysts are generally upbeat over the short term prospects and whilst we are some way from the next USCR reference point if sterling does improve further we may see opportunities to purchase some relatively cheap hedge products. Options in particular may become more attractive the closer sterling gets to the bottom of the current trading range.
Technically, the near term trading range is still expected to be £0.6600 and £0.6860, but with sterling testing £0.6660 this afternoon and with little further technical resistance until the £0.6640/30 area we could see the sterling outside the USCR sugar price cut threshold sooner rather than later. However the breaching of the £0.6660 level appears to be key, with some seeing moves back through £0.6705 to the £0.6740/50 area if it holds.
The ECB today fixed the commercial market value of the €uro at £0.6664, creating a positive monetary gap against the current artificial 'USCR' (£0.6708) of 0.656%, inside the +/-1% change threshold.
If this level is repeated at the next reference point (1st April) there will be NO CHANGE to our UK sugar price from Monday 5th April 2004.
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