Pound in Trouble as British Economy Deteriorates!
September 16th, 2009 Posted in GBP - Pound Sterling
The British Pound seems to be in trouble, as the British economy continues to deteriorate. Figures released earlier today showed British unemployment hit its highest level since 1995, as industries such as banking continue to slump. The number of people seeking jobs now stands at 2.47 million people. This is just one example of what we have seen as a reversal of fortunes for Britain recently. Just as everyone says “oh yes, the numbers from Britain keep improving,” there are still big questions concerning the British economy as a whole. Moreover, this is likely to continue taking its toll on the GBP.
Yesterday, the most pessimistic member of the Monetary Policy Committee (MPC) of the Bank of England (BoE) and also the Bank of England (BoE) Chairman himself Mervyn King stated that British Interest Rates will remain low for at least 2 years. This sent shock waves through the forex market, and pushed the GBP lower against the majors, such as the AUD, CHF, USD and EUR. Adding to the GBP’s woes, it has been revealed that most insurance companies will leave Britain if taxes don’t become more competitive. Why is this important? It is important as they contribute ₤10 billion to British revenue, and this is an example of Britain’s economic structural problems.
As people realize that Britain is structurally and economically unstable, and in some senses even in decline, the Pound has felt the brunt of this lately. So far today, the Pound is trading 30 pips lower vs. the JPY at the 149.63 level. Despite trading slightly lower earlier on against the USD, the GBP is practically unchanged vs. the greenback for today at 1.6474. For the EUR/GBP pair, there has been a slight recovery for the Pound. This is as the GBP gained 12 pips thus far today. However, it is expected that looking at the bigger picture, the outlook for the British currency is bearish.
A key thing for you traders to pay close attention to tomorrow is the British Retail Sales publication at 08:30 GMT. If the figure turns out to be better than forecast, then we may start to see a reversal in fortunes for the GBP. If you want to read more news regarding the British currency, you can do this by visiting the GBP CAMPAIGN. Additionally, if you want to start trading forex now, and make big profits from the forex market, then you should open a standard account with ForexYard.
