Opinion is really split on British Pound. Friday saw large drops in GBP after the UK economy failed to escape the last of the recession. Estimates of GDP show that the economy contracted 0.4% in the third quarter despite the lowest interest rates since 1964.
Goldman Sachs came out today stating that the economic downturn is being overplayed making GBP too cheap. RBS on the other hand, who are one of the biggest FX traders, said that they expect the pound to weaken further and their outlook is echoed by a number of other large institutions.
We saw positive gains in the first half of last week for GBP on the back of rumours of interest rate rises. In our view, once we see an actual rise that might be the catalyst for a reversal on the pound or at the least we will see some sort of bounce back.
We cannot be sure when these macro shifts will take place. The Bank of England expected the UK economy to expand over the second half of the year but we have not seen much evidence of that. But we can always find a story in the technical’s…
We have made a 50% retracement from the recent lows and critically we have crossed over and above the 200 day moving average. We have some support around the 1.555 region which includes a double bottom. For the moment this market is moving sideways and a breakout from this could give an hint as to the next long term direction.
Goldman Sachs came out today stating that the economic downturn is being overplayed making GBP too cheap. RBS on the other hand, who are one of the biggest FX traders, said that they expect the pound to weaken further and their outlook is echoed by a number of other large institutions.
We saw positive gains in the first half of last week for GBP on the back of rumours of interest rate rises. In our view, once we see an actual rise that might be the catalyst for a reversal on the pound or at the least we will see some sort of bounce back.
We cannot be sure when these macro shifts will take place. The Bank of England expected the UK economy to expand over the second half of the year but we have not seen much evidence of that so far. But we can always find a story in the technical’s…
GBP has made a 50% retracement from the lows in the first quarter and critically we have crossed over and above the 200 day moving average. We have some support around the 1.555 region reinforced by a double bottom. For the moment this market is moving sideways and a breakout from this will give a hint as to the next long term trend.
This entry was posted
on Monday, October 26th, 2009 at 9:00 pm and is filed under Fundamental Analysis, General, Market Outlook, Technical Analysis.
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