The pound is striking back! Friday marked the 3rd consecutive day of impressive gains for the GBP, as it had been dropping the previous couple of weeks. The pair ended trading at 1.6399, after touching as low as 1.6114 in trading during the week. Is this merely a retracement? Or is this the beginning of a new trend?
Over the weekend, the British Chambers of Commerce reported that they expect the UK economy to contract by 4.3% by the end of the this year, and to grow by 1.1% in 2010. The BCC also said that unemployment can reach as high as 9.7% by mid-2010 and that a chance of a relapse is possible. Chief economist David Kern said that the economy has been too reliant on government stimulus and that the UK’s international credit standing could be threatened unless the UK government does something about it. With this in mind, will this prevent the Bank of England from expanding its quantitative easing plans? Take note, the BOE will be releasing its interest rate decision later this week.
We also saw some arguments on the political level as Chancellor Alistair Darling refused to back up Prime Minister Gordon Brown’s claim that his economic stimulus plans have “saved 500,000” jobs. Could more rumblings within the week trigger political turmoil? If it does, we all know what this could lead to – another GBP sell-off!
At 11:01 pm GMT, BRC Retail Sales and RICS Housing Price Balance reports are due. The latter report is expected to show that housing prices are close to stabilizing, with few reporting a decrease in home prices in their area.
This could be a make or break week for the GBP, with some high impact reports on deck. This week, the Halifax HPI m/m, Manufacturing Production m/m and Producer Price Index reports are all scheduled for release.
Over the weekend, the British Chambers of Commerce reported that they expect the UK economy to contract by 4.3% by the end of the this year, and to grow by 1.1% in 2010. The BCC also said that unemployment can reach as high as 9.7% by mid-2010 and that a chance of a relapse is possible. Chief economist David Kern said that the economy has been too reliant on government stimulus and that the UK’s international credit standing could be threatened unless the UK government does something about it. With this in mind, will this prevent the Bank of England from expanding its quantitative easing plans? Take note, the BOE will be releasing its interest rate decision later this week.
We also saw some arguments on the political level as Chancellor Alistair Darling refused to back up Prime Minister Gordon Brown’s claim that his economic stimulus plans have “saved 500,000” jobs. Could more rumblings within the week trigger political turmoil? If it does, we all know what this could lead to – another GBP sell-off!
At 11:01 pm GMT, BRC Retail Sales and RICS Housing Price Balance reports are due. The latter report is expected to show that housing prices are close to stabilizing, with few reporting a decrease in home prices in their area.
This could be a make or break week for the GBP, with some high impact reports on deck. This week, the Halifax HPI m/m, Manufacturing Production m/m and Producer Price Index reports are all scheduled for release.
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