Pound Dropped This Week as Consumer Confidence Declined

The Great Britain pound experienced some volatile moves this week and by the weekend the currency declined against most other majors as the Parliamentary election draws near without signs of clear winner and as the households had the pessimistic outlook for their financial situation, causing the consumer confidence to worsen.
The data about improving situation in manufacturing and services industries, caused by the U.K. economy’s recovery, hadn’t brought enough confidence to the Britons. The outlook about the personal financial situation dropped to 2 points from 4 points the last month, while the consumer confidence fell from minus 15 to minus 16 this month. Some positive data from the housing sector, which somewhat boosted the sterling, hasn’t outweighed the consumer pessimism together with the signs of the slow economic recovery and, as a result, the U.K. currency dropped by the end of the week.
The opinion polls about the election don’t bring relief either. The forthcoming election may result in the stalemate and, while the three participating parties all pledged to reduce the budget deficit, which increased as much as 11.5 percent of GDP in 2009 and is considered the biggest among the Group of Seven nations, the parties disagree on the exact measures and the timing for them.
GBP/USD closed at 1.5294 this week after opening at 1.5384 and reaching its weekly low of 1.5125. EUR/GBP closed at 0.8703 after opening at 0.8673. GBP/JPY closed at 143.65.

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