Cable moved above 1.8400 as the market shuns the dollar following the $700B U.S. bailout. The dollar labored in early European trade, with the market focused on the impact on the U.S. economy. Cable experienced buying from an Asian central bank early on and European interbank names also joined the bid. On the crosses sterling is a touch easier, with GBP-JPY trading just ahead of 195.50 and GBP-CHF close to the 2.0200 area. Meanwhile, EUR-GBP is supported ahead of 0.7900 amid a broadly firmer euro tone. In the near-term external factors are likely to dominate, although the fragile state of the U.K. economy is expected to undermine over the medium term. The U.K. government has prepared the markets for more government borrowing following comments by Gordon Brown on the weekend, which were reiterated by Chancellor Darling, who said that now is not the time to withdraw money from the economy.
