The pressure emerged today on the British pound from different sides but what has really triggered the collapse containing the market sentiment causing a gap with beginning of the Asian trading was the news about a huge bargain between AIG and the English insurance company Prudential for buying the Asian parts of the first for about 35$ Bln which could undermine the British pound versus the greenback. The cable which has closed trading last week around 1.525 has started this week trading below 1.52 but after breaking 1.51 the selling momentum has increased reminding the market with the debt increasing worries and the current un stable political conditions of UK by the preliminary elections but there was nothing concerning the risk appetite to support the greenback or no new rising dovish elements in the UK economy to cause this massive selling even the news about a coming bailing out plan from France and Germany to rescue the current Greek struggling economy were calling a cause of this falling today! Despite that the impact of it was limited even on the single currency itself after news in the weekend about this waited expected action.
Technically, The pair faced a free falling after forming a peak below 1.584 resistance and it has a far away main supporting level at 1.44 right now whereas the bottom of last April has been formed but with today's sever action with no containing even to bring it back to trade above 1.5 psychological level, the pair can face further pressure to test 1.46.
Walid Salah El Din