Archived IMT (2009.09.10)

STERLING's ROUTE-66 could be a thing of the past as GBPUSD regains ground above $1.66 following the BoE decision to opt for the status quo (rates & QE scale unchanged). Traders must watch carefully whether the rally to $.16659 is another short-lived development as the currency could remain vulnerable to the combination of QE, deteriorating fiscal affairs and a cloudy outlook for equities. Only a DAILY CLOSE above $1.6625-30 in cable would force us to alter our view about this patern. The Bank of Canada of made reference to persistent strength in the Canadian dollar remained a risk to the economic recovery, while reiterating that CPI would trough in Q3. EURUSD and AUDUSD struggle at $1.46 and 0.86 respectively.