UK surprised the markets by reporting that Q4 10 GDP did not expand slowly as the consensus expected, but actually contracted by 0.5%. The economy last contracted in Q3 09.  A full breakdown of the report is not made available until the next report in late February.  However, the preliminary numbers suggest that the service sector contracted 0.5% and construction fell 3.3%, while industrial output rose a little less than 1%.  This is largely consistent with the PMI readings. The market’s reaction to the disappointing data was clear.

GBPUSD seems to be setting itself for another dip towards 1.4810 level and
test that level again. Before doing so it is taking some correction and if
GBPUSD rises to something around 1.5000 level, then it will be an ideal
situation for traders to sell GBPUSD for targets around 1.4810 level.  

Break of 1.4810 will open up GBPUSD for an extended move towards 1.4500
level and break out traders will surely focus on that level as well.

On the upper side, break above 1.5000 level will set 1.5200 as next target
for GBPUSD. We might see traders entering with decent stops and hope to
capture the right move.

The GBP is rapidly falling and soon to approach a fresh, 9-month low against the USD dollar which was set yesterday at 1.5189.

This downward fall is due to the pair (GBP/USD) recently breaking through the 1.5240 support.

We can report that Valeria Bednarik who is an independent analyst for FXStreet.com that:

“The pound remains under selling pressure, weighed [down] by rumors of an early election in the U.K. after earlier GDP positive revision give the U.K. government the chance to claim the economy is on the way to recovery,”

Tuesday, January 19, 2010
In the early Asian trading session today, The British Pound gained versus the Dollar which lost ground against a host of other currencies as well. The Pounds trading picked up from $1.6341 on Mondays closing to trade at $1.6424 today, a reported 6 week low. Riding on the wave of the proposed Kraft-Cadbury Acquisition deal, The Pound has gained its ground against the Dollar as well as the Euro after a steep fall last week on speculations that the Bank of England may cut interest rates even further and quicker than expected. The revival of the Pound may also be attributed to the shortly expected announcement by the British Prime Minister, Gordon Brown of a second bank bailout package. The Pound being used as a substitute to the Euro has further bolstered its revival as the debt crisis in Greece worsens, making the Euro less lucrative against the Pound. However, the British Consumer Price Index data is expected to be released today which will decide the run-off for the pound hereafter.

The British pound rose today for the 4th straight day this year, after a losing session in the first week of the year. The BoE suggested that there may be a need to increase interest rates this year, which sparked trader interest in the currency. The Pound touched a low of 1.5895 on Jan 7 of this year, touching the high of 1.6266 so far, a new 3 week high.

The Pound rose against both the Euro and Yen, in addition to the US dollar, as the BoE was reported to have said that the central bank had done all that it could to stimulate the UK economy. Some experts believe that the current uptrend in the Cable (as well as other major GBP pairs), may touch the 1.6355 area before it falls.

Economic data coming out of the UK last month have lent more or less no clear direction to the Pound after the Manufacturing output remained unchanged, whereas industrial output rose slightly.

The Euro today declined from the high of 1.4440 which was made on December 31, 2009, to take a rebound beyond 1.4335, last seen around 1.4350, as fresh Manufacturing data lent confidence that the Euro Zone economy was upbeat. The Euro Zone manufacturing PMI rose slightly to 51.6 in December compared to the previous month, while German PMI rose to 52.7 compared to 52.4 for the same period.

Both the Euro and the pound saw a huge jump of 70-100 pips in the early European trade today. The Pound had earlier rallied to peak at 1.6235 on the last day of the previous year, correcting this year so far, to below 1.6070, against the dollar.

The Pound has also jumped as the PMI (manufacturing) and household lending data provided a positive sentiment to the currency markets. The Pound benefitted as the PMI jumped to 54.1 in December compared to 51.8 in the previous month, when the market expected a decline. Furthermore, the BoE suggested a sharp increase in housing lending to over £1 billion compared to nearly half that amount in the previous month.

November 11, 2009 12:25 GMT

The Sterling rose against the Greenback after news that Britain’s unemployment rate had decreased. UK Jobless Claims Change results indicated that the unemployment rate in Great Britain has decreased () despite expectations of an increase. For the last three months, the unemployment rate recorded showed a fall from 7.9% to 7.8%.

The Cable was trading around 1.6770/80 at 09:52 GMT, compared with yesterday’s closing price of 1.6602. However, after the BoE release suggesting slower economic recovery in the UK region, the Cable took a massive dive to 1.6650 at 12:24 GMT from the day’s high of 1.6798.

After taking a lead in major currencies today, following a negative sentiment reacting against the negative credit ratings by Fitch, accompanied by S&P’s negative comments about the UK’s monetary system. It has been suggested that the credit situation in the UK was one of the “most delicate” amongst wealthy nations.

Thursday, 22^nd October, 2009, 11:22 GMT

The prospect of higher interest rates was highlighted by BoE Governor, Mervyn King in his speech last night. Policy makers of the BOE resolved not to change their asset purchase program and maintain the record low interest rate of 0.50%. Member of Bank of England, Tucker also conveyed the BoE’s intention to extend its quantitative easing plan.

There was no argument for the increase in the bond purchasing program, which currently stands at GBP 175 bn, initiating a rise in the GBP/USD pair in the currency markets. At 07:00 GMT, the GBP strengthened during U.S and Asian sessions and touched a fresh 6-week high at 1.6640. At 08:02 GMT, the Cable traded at 1.6565 with 1.6520, 1.6425 and 1.6340/60 at the support levels and at resistance levels of 1.6635, 1.6690 and 1.6745.

Currency Major Update

13^th October 2009, 0910 GMT

Euro

The Euro continued its bull run against all major currencies following strong corporate earnings and some improvement in employment figures. It is still in uptrend and may peak higher in the future as European Central banks shift massive reserves into the Euro. Retail sales are improving across the Euro zone which may further fuel the demand for the Euro. In today’s session, the EURUSD moved upward to touch the day’s high of 1.47810, currently hovering around that level.

GBP

The GBP is in downtrend following the worst recession of the century and a weak monetary policy. The bear run was further fuelled by the statements issued by BoE that it would key the key benchmark interest rates unchanged at 0.5%, the lowest in the past 4 decades inspite of the improvement in corporate earnings. Currently, the Cable is trading at 1.57375 with consensus suggesting that there’s still room left for downside.

JPY

JPY is still in uptrend with the Euro being the only exception as that pair appears to be in a consolidation phase. Currently, it is trading weak at 89.895 (0850 GMT) on the news that economic recovery is gaining momentum across the globe, and this may further reduce the demand for safe haven currencies. Further, the demand for JPY may weaken with near zero interest rates at 0.1%. It appears to be a selling opportunity for traders.

USD

The Greenback is continuing the rally it started last week with investors anticipating an early interest rate rise and tightening of the monetary policy. The U.S. Dollar Index is trading 1% up from last week. All major currencies have lost ground against the greenback, which is currently trading at 1.47770 versus the Euro.