Market Update - GBP USD

Sterling was marching steadily higher through mid October until we hit a major stumbling block on Friday 23rd. Third quarter growth figures didn't show any growth at all. In fact the economy contracted by 0.4% instead of the 0.2% expansion that analysts were expecting. That prompted a vicious sell off, sending the pound three cents lower almost immediately. Last week was somewhat better as the stock markets finally entered correction territory, sending investors scurrying away from high yield currencies and into more defensive plays including the dollar and pound. By Thursday/Friday the previous week's growth shocker was looking more like a blip as sterling rose to new six week highs against the euro. However, the "safe haven" status of the dollar has meant that the pound/dollar rate has remained subdued and we are still trading in the middle of the two week range. Much now depends on the Bank of England meeting this Thursday (November 5th). It seems to have come around very quickly after they elected to keep interest rates and quantitative easing on hold in October. Another "no change" vote would certainly help sterling's cause this week, especially if the subsequent meeting minutes (usually released a few days later) show another 9-0 vote.

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Labels: usd-update