Sterling slumps despite Qatar news

Sterling broke lower through the 2.000 level despite news that  Qatar’s investment arm is close to acquiring a nearly 30% stake in the London Stock Exchange from the Nasdaq Stock Market Inc., a purchase that would give the Middle Eastern government a high-profile position in the current scramble for dominance among the world’s stock markets.

While a deal isn’t certain, the move by the Qatar Investment Authority comes as governments in the Middle East and Asia, sitting on vast wealth, are seeking better investment returns than their standard holdings of U.S. Treasurys.

The Qatar deal, if confirmed would certainly boost confidence in the UK economy and sterling, but according to Financial Mirror charts, a break below $1.9960 would open the way for a deeper correction to major support at $1.9860.

A general weakness in sterling is likely to spill over into EURUSD trading, pushing the pair lower towards major support at $1.3790, while USDJPY needs to regain the Friday NY close of JPY115.37 to mount a move on 116.45 minimum target.