The Great Britain pound felt itself strong recently, but was a bit soft at the start of today’s trading session. Will the currency be able to maintain its rally this week?
Britain’s economy emerged from recession and the sterling was rallying since then. Last week was the week of strength as all Purchasing Managers’ Indices (manufacturing, construction and services) were good. This week’s reports are also expected to be fairly positive. Analysts estimated ahead of the report that the Halifax House Price Index continued to grow at the 0.2 percent rate in April. Industrial production expanded 0.3 percent and manufacturing production increased 0.4 percent in March. The trade balance deficit is expected to fall a little from £9.4 billion to £8.9 billion.
The most important event for the UK pound this week is the Bank of England policy meeting on May 9. No change to the monetary policy is expected, but it will be interesting to see how many hawks the central bank Monetary Policy Committee has. If there are enough policy makers with positive outlook then the currency may gain. Yet uncertainty ahead of the transition of leadership from Mervyn King to Mark Carney may prove detrimental to the sterling.
GBP will likely to be strong against EUR, which was weakened by last week’s European Central Bank policy decision and today’s comments of Mario Draghi. The currency will also likely continue to be firm versus JPY, which remains weak amid Bank of Japan’s aggressive easing. The performance against USD is harder to predict, but it is still rather possible that GBP beat the greenback.
DailyFX is indeed bullish on the pound, believing that it may slowly rise to 1.5680. At the same time, Forex Crunch is a bit more cautious, thinking that there is a resistance at the 1.5648 level.
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