GBP Forecast – Pound to Decline on Weak Economic Outlook?
June 22nd, 2009 Posted in GBP - Pound Sterling
Name: Dan
Email:
GBP
The British currency has recorded some recent highs against a number of its crosses, such as the USD and EUR. Up until the end of last week, a GBP rally was on the minds of many currency experts. However, this has come into disarray as of Monday’s trading, since the Pound came under much pressure. This pressure was owed to a variety of factors. The Pound is fairing lower against the Dollar today at the 1.6351 level. The GBP is also fairing against the EUR and JPY.
Just today, the World Bank released data suggesting that the global economic recession will be prolonged. This sent shock waves through the equity and forex markets. As a result, the FTSE finished trading over 2.5% lower. Adding to this, pending legislation in Brussels about regulation of Europe’s financial market is set to put downward pressure on the GBP for the time being, as investors fear a rapid exodus of Britain’s financial sector funds to the U.S. and Switzerland.
If the pessimism in the global markets continues in the coming week, then the possibility of traders fleeing currencies such as the GBP to the USD and JPY is high. This is so, as investors will seek these currencies as a safe-haven in times of global economic turbulence. Also, additional downward pressure may be added onto the Pound if commodities such as Oil continue to decline, as Britain is very dependant on the energy sector.
CHF
The Swiss Franc has been floating against the USD in the past week, whilst against the British Pound it has weakened substantially. However, as the global economic situation deteriorates again, the CHF has shown some resilience in Monday’s trading. CHF bullishness on Monday was also owed to the Swiss National Bank (SNB) keeping Interest Rates unchanged at 0.25%. Confidence increased in the CHF, as the SNB stated that it will intervene should the need arise to prevent the CHF from overheating in the forex market.
The USD/CHF level is lower by about 20 pips today at 1.0861. The CHF is trading higher against the GBP by an impressive 90 pips at the 1.7750 level, as British economic woes worsen. The Swiss currency also rose against a number of other of its major crosses. The Swiss currency is likely to go even more bullish in the coming week, if the global economic situation continues to deteriorate further.
Start trading with Dan Eduard now:
Tags: CHF, EUR/GBP, GBP, GBPUSD, Pounds, Swiss National bank, USD/CHF, Weak economic outlook, World Bank
