Benefit of Forex Better Bank Earnings May Benefit Sterling

The dollar and yen fell as risk sentiment improved in light and technical trade on Monday. Europe still celebrated the Easter holiday and few economic reports were released. The yen rose against the dollar but declined versus most other key currencies on increased deflationary fears as wholesale prices fell. The greenback was pressured by concerns that China will reduce its purchase of US debts. The Dow fell 26 points to 8058. The euro rose to a 4-day high as risk appetite improved as China's industrial output and lending rose. Despite Canada's weak business outlook surveys, the Canadian dollar rose to important technical resistance. The Australian dollar climbed to the highest level since October 7.
The GBP/USD rose to just below the important 1.49-area resistance. The outlook has improved for global banks, and Goldman Sach reported better-than-expected earnings and wants to return the TARP money. The UK is particularly exposed to international banks so better bank earnings will likely support the pound. The GBP/USD has broken its downtrend and established a bottom. If the 1.49-1.50 resistance is broken, the pair may rally to 1.60. We buy the GBP/USD with stop at 1.4450.