Archived IMT (2010.08.02)

GBP NET SHORTS against USD fell to 17,940 contracts, the lowest level since August of last year. The chart http://chart.ly/7fxh7s shows GBPUSD is closely correlated with futures speculators interest in GBPUSD. This months BoE inflation report maybe the only viable barrier to further GBP gains in the event that it reiterates inflation to return below 2% at the end of the 2-year horizon. Until then, GBPUSD will seek to recapture $1.5940 after last weeks important break above the 200-day MA for the first time since January. As long as UK services and construction PMIs this week are w/in or better than expectations, the $1.6 can be seen this week, but more GBP gains are viable against EUR. EURUSD eyes 1.3270.