Pound to climb up the mound?
Posted on December 8, 2009 by Yohay
Filed Under Forex News, Forex Opinions | 15 Comments
Some good news for the Pound today – growth has returned to the UK according to the unofficial NIESR GDP estimate. This news was unnoticed. Looking at the near past, this institute was very accurate. Here is how you can use this info in the future.
The National Institute for Economic and Social Research (NIESR) has published the monthly GDP estimate for the three months ending in November. Their estimate showed growth of 0.2% in GDP in these three months. In the accompanying statement, they said that the economy has recovered from the weakness that it showed during the summer.
This news went unnoticed in the major news agencies, and no impact was seen in the forex markets. GBP/USD continued trading around 1.63 before and after the release at 15:00 GMT. No other major or minor events happened at the same time.
This isn’t the first time that this institute is ignored. I find this unjust. The NIESR institute foresaw the Q3 contraction. Before the the preliminary release of the GDP for the third quarter, the wide consensus of economists quoted by mainstream media talked about a return to growth – the end of recession in Britain, like all the other Western countries that enjoyed growth in Q3. Some already enjoyed growth in Q2.
Well, this Q3 contraction didn’t come as a surprise to people who followed NIESR – in their monthly estimates they didn’t see growth in Q3 – and indeed, no growth was seen. Most forex traders read the official expectations, and were shocked by the results – GBP/USD plunged – so did Pound crosses.
I’ll keep following their monthly releases of GDP. They proved to be much closer to the real result than consensus of economists. If these good results will continue – expect strong Q4 growth, at a very expected rate.
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