British Pound Rallies on Better Growth Prospects

The GBP USD is up nearly 1% at themid-session after a stronger-than-expected economic report signaled growth.This news reduced the prospects for further easing by the Bank of England,therefore, driving up the value of the Sterling.

The GBP USD is up nearly 1% at themid-session after a stronger-than-expected economic report signaled growth.This news reduced the prospects for further easing by the Bank of England,therefore, driving up the value of the Sterling.

For a couple of weeks, the Cable has beenunder pressure on speculation that the BoE would be forced to implement a newround of quantitative easing due to new tax increases and fresh spending cuts.

The BoE has been hinting that additionalasset purchases would be necessary to prevent the economy from derailing,sending it into a possible double-dip recession.

The initial boost for the British Poundcame after it was reported that the U.K.’s third-quarter gross domesticproduct grew 0.8% versus the previous quarter. An additional surge in the Sterling was attributed to the S&P Corp’s revisedcredit outlook for the U.K.The credit reporting agency changed its outlook from negative to stable, citingthe government’s willingness to cut spending as the main reason for the change.

Technically, the GBP USD completed a 50%correction of the break from 1.6106 to 1.5650. This price is 1.5878. Furtherupside action could drive the Pound into the Fib retracement level at 1.5931.

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

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