Yesterday’s unexpected Gilt auction failure hit the British Pound as the market started to question the UK’s ability to continue its current fiscal and economic policy based on massive borrowing, a view echoed by the Governor of the Bank of England, Mervyn King.   Depending on who you read this has not happened since either 1995 or 2002.  Fortunately for the UK this morning’s auction for shorter dated Gilts was successful – not surprising given how far the yield flattened recently.

As result of the above the euro strengthened and the day finished on an upbar which closed just above all three moving averages suggesting once again that we are in for a long period of sideways consolidation unless and until we see a breakout above the 0.95 region or a break below the 0.8750 region, either of which will indicate to a more sustained trend.   With the $undamental news both eurozone and UK equally bad today’s trading can be best be described as neutral and it provides little opportunity in the way of a sensible, risk based trade.  It may be that the only way to trade this pair is on a longer timeframe, in which case we will to wait for both the weekly and monthly charts to close.

My suggestion today is to step aside and wait for tomorrow when there are significant items of economic news pertinent to both the euro and British Pound.  These include the Nationwide HPI, German preliminary CPI, current account for the UK and industrial new orders for Europe.

In the meantime you can keep up with all the live currency charts, latest economic news as well as all the fundamental news but simply clicking the appropriate links.