Pound sterling holds steady against greenback, but faces resistance against the Euro
on the forex markets, it experienced volatile trade sessions this past week, making bullish advances on the greenback before a series of red flags swung the pendulum the other way. GBP/USD advanced to a high of 1.5280 in early-week trading following a report on UK growth showing signs of underlying economic strength. The downtrodden British economy has faced trying times, as households have struggled with high inflation amid declining business confidence and lower consumer demands. On Wednesday however, the markets saw signs of improvement, with news that the British economy expanded by 0.3% in Q1, which was a pleasant surprise given that some analysts were expecting it to be flat. Pound sterling responded swiftly on the forex markets, consolidating above 1.515, after having plunged from its early-week highs. Complementing the Q1 economic expansion was a rise in consumer spending for April, which edged up 0.1% for the month. Although these figures appear modest, positive market fundamentals may be enough to renew confidence in the British economy, especially considering how the market reacted to comments from the Fed’s Ben Bernanke.
Pound loses strength on the forex markets after Bernanke’s Comment
The Chief of the US Federal Reserve made headlines on Wednesday after stating the Fed’s latest round of quantitative easing may be scaled back if US recovery deepened. As is often characteristic of a market driven more by headlines than fundamentals, Bernanke’s comments sent the Pound tumbling, as forex investors looked for safer bets to cushion their potential fall should Q3 come to a close. By week’s end however, GBP/USD managed to hold steady, treading the 1.515 line before closing at 1.5129, settling somewhere in between the volatile highs and lows.
Economist Paul Fisher Makes an Impact on Forex.
Despite its recent advances the UK economy has been unable to create a bigger buy for its major currency. At the same time, analysts don’t appear convinced that the British economy has changed course. According to Bank of England policy maker Paul Fisher, the British economy is likely to remain sluggish for the foreseeable future. Combined with positive German data, Fisher’s comments sent the GBP/EUR tumbling for a fourth consecutive day. By week’s end, Pound sterling retraced some of its mid-week losses against the Euro, closing at 1.1694, higher than its weekly low of 1.6138, but slightly off its Monday high of 1.1833. GBP/EUR is likely to face resistance in the week ahead, having failed to retrace its mid-week losses.
Get a free Forex PDF PLUS:
- 14 Video Lessons
- Free One-on-One Training
- A 5000$ Training Account
- In-House Daily Analysis
- Get FULL ACCESS