Categorized | Forex Stock News, GBP | USD

GBP continues To Lose Value

Pound slips against broadly stronger greenback

Pound slips against broadly stronger greenback

gbp-usd-daily-chart gbp-usd-monthly-chart

Trading the GBP is going to get interesting.

On the one hand, the monthly chart shows us we have a inverted hammer/doji forming.

The main problem with the GBP and their economy is that the British are an importer nation that relies heavily on imports. This will take and have a large ramification on the UK economy as a whole.

Imports – food, oil, clothing – are going to effect the economy, consumers will be hit the hardest. Inflation – the inflation as a result of low interest rates is going to lead to some interesting weeks and months ahead.

If the UK government step in and raise interest rates this will further lead to a weaker economy, despite the fact that it will increase the sterling’s value, it will have a disastrous effect on small businesses that are the main contributes to the UK economy.

The UK government have probably the most difficult task that lays ahead. Those exporting will enjoy higher profits but for the most part the UK imports the majority of their goods.

With higher food costs and business costs the UK will see their economy slow, if you add inflation to the mix then it spells a recipe for disaster.

If the UK gov have to intervene and raise interest rates on an already fragile economy it could be disastrous and we could very well see the USD and possibly the EURO become stronger than the pound in the coming months.

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Investing.com – The pound edged lower against the U.S. dollar on Friday, after the release of downbeat U.K. public sector borrowing data, while expectations for U.S. rate hike before the end of the year continued to support the greenback.

GBP/USD hit 1.2224 during European morning trade, the session low; the pair subsequently consolidated at 1.2234, down 0.16%.

Cable was likely to find support at 1.2086, the low of October 11 and resistance at 1.2376, the high of October 11.

The U.K. Office for National Statistics reported on Friday that public sector net borrowing rose by £10.12 billion in September, compared to expectations for an increase of only £8.20 billion.

Public sector net borrowing rose £10.33 billion in August, whose figure was revised from a previously estimated gain of £10.05 billion.

Meanwhile, expectations for a 2016 U.S. rate hike continued to support demand for the greenback. New York Fed President William Dudley said on Wednesday that the U.S. central bank will likely raise interest rates later this year if the economy remains on its current trajectory.

Sterling was higher against the euro, with EUR/GBP shedding 0.24% to 0.8897.

The single currency remained under pressure after European Central Bank President Mario Draghi said on Thursday that an adjustment to the bank’s stimulus program could come in December, saying its assessment would benefit from new economic projections to be drawn up by ECB forecasters.

The comments came after the ECB left interest rates unchanged at record lows of zero earlier Thursday and kept the deposit facility rate at -0.4%.

 

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