Will Widening U.K. Budget Cripple Recovery?

British Pound bulls should not get too excited about this week’s rally.  Short-term, U.K. production may have shown some improvement, but longer-term there is a deficit to tend to.

The GBP USD posted a big gain for the week. Strong equity markets provided most of the support but the market surged on Friday following news that U.K. production was better than expected.

This is all good news over the short-run, but the U.K. economy is still going through a contraction while the budget deficit is widening. Traders may ask for more evidence of a bottom in the economy before beginning a new uptrend.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More