FX round-up: Sterling gains amid resources rout

Sterling turned in solid performances on most major crosses on Wednesday against a backcloth of falling gold and oil prices, but pundits remain wary on the British unit's future course.

At about 17:10 BST, sterling was up 0.34% to $1.3243, and was up 0.75% to €1.1761. The dollar-spot index rose 0.29% to $94.814, while gold flopped 1.24% to $1329.4 an ounce.

Sterling also rose on the euro, loonie, aussie, kiwi and yen.

SwissQuote focused on the cable, however, observing that the cross' momentum had stalled, citing hourly resistance at $1.3372 and support at $1.3024. Long-term, it saw support at $1.0520 and resistance at $1.1.5018.

"The long-term technical pattern is even more negative since the Brexit vote has paved the way
for further decline," SwissQuote said in a research note.

Rabobank Financial Markets Research was similarly downcast, characterising sterling as a "vulnerable currency" and looking for it to move towards $1.25 on a six-month view.

"Even though the immediate fall-out of the UK's (non-binding) EU membership referendum have been contained, job creation and medium-term growth are susceptible to weak investment spending."

Against this backcloth, the British unit appeared to take Wednesday's slightly weaker-than-expected mortgage approvals data from British Bankers' Association in its stride.

"The pound continues to look well supported, on course for its best run of gains since the beginning of July," said CMC Markets chief market analyst Michael Hewson, referring to a shorter horizon than SwissQuote and Rabobank.

Stateside, the dollar campaigned mostly higher, progressing on the euro, loonie, aussie and yen. Slightly weaker-than-expected house-price data had little impact on its fortunes.

That's because the market is almost entirely consumed by the US Federal Reserve's annual conference at Jackson Hole on Friday, with chair Janet Yellen speaking and all ears pricked for what she might or might not utter.

Her speech is to follow hawkish jawboning last week by Federal Open Market Committee permanent voters Stanley Fischer and William Dudley.

"Should Yellen deliver an equally hawkish warning on Friday then I expect markets to respond accordingly," said Craig Erlam, senior market analyst at Oanda.

In such a scenario he expected December would likely become the most likely FOMC meeting for a rate hike, with September's potential being priced in more than it currently was, Erlam said.

Finally, both the dollar and sterling continued their run-up on South Africa's rand. The dollar was up 1.2% to 14.1703 rand, and sterling was up 1.57% to 18.7680 rand.

This, said HL Currency Service senior analyst Chris Saint, was amid chat the country's finance minister (Pravin Gordhan) could soon be "arrested in connection with a 'rogue unit' set up at the South African Revenue Service."