GBP/USD Likely to see price stability in the near term
14/08/08 20:49
Pound suffered losses against the major's for 9
consecutive days. While GBP has suffered partially
due to Eurozone weakness reflected in GDP, the UK
remains behind the curve of market reaction to
pricing in declining economic growth and tightening
of interest rate spreads vs the majors.
Bank of England governor Mervyn King has hinted that
the forceful inflation gains are hightening the
reality of recession in H2, as the market prices it
in selling GBP. BoE is highly likely to cut rates as
UK vulnerability to housing recession, suffering
financial institutions and credit scenario continue
to weigh on the region. Although i have mentioned
this some time ago, the market and price are now
making a profound adjustment in consideration of the
facts. With current rate at 5.0% there exists larger
potential for downside moves vs. the majors. GBP/USD
is at key support 62% retracement and S/R on weekly
chart. Downside is limited in the near term as the
market digests the August move.