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EUR Daily News
GBP Recoups Losses from its 6 Year Low
After a week of heavy losses, the GBP took gains against the EUR and the USD. The 6 year low that the GBP saw last week is beginning to erode. The Pound was pushed down by the market with the expectations of future Interest Rate Cuts by the Bank of England. Yesterday the EUR/GBP closed down at 0.8529 while the GBP/USD closed up at $1.4980.
Traders may not take this as a sign of a sharp rebound form the Pound's recent lows. Comments made by the former Chancellor of the Exchequer discussed the positive aspects and benefits that a weak Pound could have on the British economy. He added that the benefits during negative economic growth could ease the national recovery, and also that a prolonged depreciation of the Pound could turn into a run on the currency. Overall, the GBP/USD has dropped 24% this year. The Pound has been sent lower on U.K. recessionary fears and an increase in the government budget deficit.
Concerns remain that the U.K. government may attempt to boost the economy through an economic stimulus plan. Many economists feel the stimulus measures may not have the desired affect and would saddle the government with unnecessary debt and an increased yearly budget deficit.
The UK economy and government is facing a massive challenge ahead. With this frame, there may be room for more depreciation of the Pound. The BoE may choose to cut Interest Rates further or undertake a large government spending program to spur economic growth. Future fundamental data should be closely followed. Any one of these changes, if positive, could send the GBP/USD to the $1.45 level.
| Dato | Tidspunkt | $€£¥ | Begivenhed | Per. | Forr. | Prog. | Fakt. | Vigt. |
|---|---|---|---|---|---|---|---|---|
| 11/18 | 09:00 | EUR |  Italian Trade Balance | -2.15B | -2.50B | -2.59B |  |
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