Pound Keeps Strength amid Negative Fundamentals

The Great Britain pound fell against the US dollar, yet managed to advance versus the euro and the Japanese yen today even as fundamentals were not at all supportive for the currency.
The Office for Budget Responsibility revised the growth forecast to -0.1 percent for 2012 and to 1.2 percent in 2013 in its economic and fiscal outlook. The previous forecast was 0.8 percent for this year and 2.0 percent for the next. Chancellor of Exchequer George Osborne said that austerity should be extended by one more year to 2018.
The macroeconomic data was not sterling-positive either. The service Purchasing Managers’ Index came out at 50.2 for November, far below the expected rate of 51.1 and demonstrating the lowest reading in 23 months. All in all, the news was bad for the pound and it is surprising to see that the currency managed to stay firm against some other majors.
GBP/USD went down from 1.6099 to 1.6085 as of 22:04 GMT today. At the same time, EUR/GBP dropped from 0.8132 to 0.8120 and GBP/JPY picked up from 131.84 to 132.65 — the highest settlement since April 2.

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