Pounded by Ongoing Recession
Posted on October 23, 2009 by Yohay
Filed Under Forex News | 26 Comments
British GDP in the third quarter fell by 0.4%, surprising economists but not surprising those who checked the unofficial NIESR estimate, that proved correct. The ongoing recession sent the Pound free-falling from the resistance line. Where will the fall stop?
Consensus estimates regarding Britain’s third quarter GDP stood on 0.2%. Expectations were revised upwards during the week, from previous estimations of a 0.1% growth.
The unofficial GDP estimate made by the NIESR institute showed that Britain didn’t grow in the third quarter. This unofficial estimate, published every month, proved correct. I’ve highlighted this figure again and again. Check out the GBP/USD Forecast.
No growth for Britain. For the 6th consecutive quarter, the British economy is squeezing. GDP fell by 0.4%, showing that the recession is very far from over. This is really bad, especially when comparing to other countries.
Some countries already got out of recession – Germany, France and Japan already showed growth in the second quarter. Australia has never been in recession – no two consecutive quarters of contraction.
GBP/USD tumbling down. Where next?
GBP/USD already reached 1.6683, marginally above the resistance line to 1.6480, and the drop continues. Traders bought the Pound by the high expectations, and now sell them by the fact – the British economy is still in serious trouble.
GBP/JPY made a move above 153 before the release, and 200 pips were wiped instantly. EUR/GBP made a sharp move higher to 0.9131. Across the board, the Pound is falling.
Where will the Pound go? An immediate support line appears at 1.64, and GBP/USD is getting close to that now. Afterwards, 1.6110 is another support line.
Beyond that, a great stronghold appears at 1.5720, where the Pound less than two weeks ago.
Where will it end? I wrote that EUR/USD and GBP/USD ran out of fuel. GBP/USD is now going downhill.
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