British pound To Be Contained Vs the US Dollar
The Dollar/Pound exchange rate has lately been seriously affected by the US reporting season. A recent foreign exchange review from Caxton FX has revealed that the British pound had marginally overpowered the Euro due to its recent losses and debt problems, but the intra-day highs have fallen, mainly due to ratings given by a leading rating agency. Due to the volatility of the foreign exchange market, because of the recession, it seems that the exchequer and the government have decided to try to contain the Pound/Dollar rate. their goal, to keep away from further inflation.
The economic growth of UK in the first quarter not only raised many eyebrows, but also brought to light the potency of this recovery process as the austerity measures begin to take effect. The single currency has not been capitalized even ahead of the Greeks return to capital markets. Greece in an effort to avoid serious economic problems now plans to raise some 1.25 billion Euros from the capital market, the demand for which can provide a positive direction for the Euro currency. Because of this the Euro and the Pound have come under serious pressure in the markets. The latest focus is on UK’s current inflation rate.
The British Pound has continually made very modest gains, where it is making profits against the dollar up to $1.50. But continuously poor statistical results and revisions have seen those gains being eroded or wiped away continually.
With the overall GDP remaining unchanged at 0.3%, this is a clear indication of how badly the recession had hit the country.
The Office for National Statistics has revealed that the current account deficit of the country has widened significantly to its worst levels since 2007. Standard and Poor recently gave a negative economic outlook and this encouraged investors to go on a sterling selling. The Pound’s value is not expected to rise further this year as investors do not want to fall short on dollars when the US corporate seasons earnings open.
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