Tuesday, 8 Dec 2009

GBP Drops Amid Deficit Concerns

While the U.S. Dollar was still making impressive gains based on last weeks unemployment figures, Sterling fell dramatically in trading on Tuesday amid a string of negative news reports out of England. Following the release of a report saying that England needs to reign in on its deficits, the Pound slid against the greenback, allowing the Dollar to reach a one-month high. Traders should pay attention to several news events in the coming days likely to impact the Pound. The British pre-budget release, set for 12:30 GMT tomorrow could create volatile market conditions. If the report shows a less then stellar outlook for the British economy in the year ahead, traders can expect Sterling to drop further. If the report turns out to be more optimistic, a Pound resurgence may be on the horizon.

Oil prices continued to fall on Tuesday, largely due to the strong Dollar. Traders should pay attention to the impending U.S. crude oil inventory report. Set to be released at 15:30 GMT Wednesday, most analysts are predicting an increase in American inventories. If this is indeed the case, prices may continue to drop. If it turns out that U.S. crude stockpiles have declined, oil prices may get a boost in afternoon trading.