PRLog org: Currency Market Updates – Sterling Stumbles Again.
Currencies Direct July 22nd 2009 - 2 minute read
Sterling continues a roller coaster ride with the euro and
US dollar. Traders are watching the crucial support level of 1.15. June’s
public sector net borrowing has contributed to this situation. Ben Bernanke’s
testimony has served to help the US
PRLog (Press Release)
– Jul 22, 2009 – Sterling is the big loser overnight in the markets and it
is on the ropes this morning again. Recently we have witnessed a consistent
pattern of steady gains followed by a sharp sell off. The pound has retraced to
1.63 against the USD and 1.15 against the euro; the 1.15 level is a crucial
support on GBP/EUR and a break below 1.15 will be worrying for the pound. So
what is causing this renewed weakness for the pound?
– Jul 22, 2009 – Sterling is the big loser overnight in the markets and it
is on the ropes this morning again. Recently we have witnessed a consistent
pattern of steady gains followed by a sharp sell off. The pound has retraced to
1.63 against the USD and 1.15 against the euro; the 1.15 level is a crucial
support on GBP/EUR and a break below 1.15 will be worrying for the pound. So
what is causing this renewed weakness for the pound?
Initially the rot was started with the confirmation that
June’s public sector net borrowing came in at £13 billion, the figures were
actually better than expected but still underlined the dire state of public
finances and understandably focused attention as to how we can climb out of
this debt? Cue feedback from the National Institute of Economic and Social
Research (NIESR) which said that government finances will remain deeply in the
red for at least 4 years and this is based on the Treasury tightening the crews
on public spending to a higher degree than planned…so a tighter reign on
spending and inevitable tax rises is on the menu beyond the next election- very
appetizing. Sterling has suffered on this negativity as it does on any scent of
bad news; a couple of articles also added to pressure on the pound- the first
reported in the Financial Times highlighting a survey that more than half of
businesses did not see any improvement in their prospects for at least another
12 months.
June’s public sector net borrowing came in at £13 billion, the figures were
actually better than expected but still underlined the dire state of public
finances and understandably focused attention as to how we can climb out of
this debt? Cue feedback from the National Institute of Economic and Social
Research (NIESR) which said that government finances will remain deeply in the
red for at least 4 years and this is based on the Treasury tightening the crews
on public spending to a higher degree than planned…so a tighter reign on
spending and inevitable tax rises is on the menu beyond the next election- very
appetizing. Sterling has suffered on this negativity as it does on any scent of
bad news; a couple of articles also added to pressure on the pound- the first
reported in the Financial Times highlighting a survey that more than half of
businesses did not see any improvement in their prospects for at least another
12 months.
Ben Bernanke’s semi-annual testimony to congress affirmed
that the Federal Reserve is in no hurry to tighten monetary policy due to the
fragility of the US economy. He aimed to soothe those worried on inflation
rising sharply by adding that the extraordinary policy measures would be
withdrawn in a smooth and timely manner. So no exit strategy or focus on
raising interest rates in the near term and the energy is still definitively on
nurturing a sustained economic recovery. The USD firmed on the back of the
cautious note by Bernanke.
that the Federal Reserve is in no hurry to tighten monetary policy due to the
fragility of the US economy. He aimed to soothe those worried on inflation
rising sharply by adding that the extraordinary policy measures would be
withdrawn in a smooth and timely manner. So no exit strategy or focus on
raising interest rates in the near term and the energy is still definitively on
nurturing a sustained economic recovery. The USD firmed on the back of the
cautious note by Bernanke.
Report by Phil McHugh
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