Sterling didn’t show much follow through from its recent strength on the back of yesterday’s healthy employment numbers. A classic sign that positioning was already quite long. If positive GBP performance is to persist then a period of consolidation might be necessary. From a technical perspective there’s a hint of divergence which could be a sign that we’re close to topping out, but I wouldn’t be surprised if we make another charge to a new short term high before that happens. Back to the employment numbers, broad based not London-centric improvements in performance…wow! Ed Milliband must be chewing his finger nails, and other developed nations can only look on with envy. I’ll stop there, this is no political blog!


European inflation numbers this morning, if we get lower numbers than consensus estimates that could add fuel to recent euro weakness, we’re hovering just above significant support levels in EUR/USD. I look at the 1.3470 – 1.3510 zone as a support area, below which we could find the pair moving back to the low 1.30s. It’s something to keep an eye on.


Apart from that earnings season bears watching. So far the numbers have been reasonable in general. This is good as on some level current valuations need to be justified. Clearly we could alternatively just disregard valuation and accept that we’re where we are because we live in a zero bound world, but that’s a very scary way of looking at things.