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Pound Lags Behind

The British Pound stayed behind in the race to beat the greenback.New QE programs loom over the currency.  GBP/USD is still in old ranges and some Pound crosses are in areas not seen in quite some time.

GBP/USD reached a peak of 1.5998 at the beginning of August. Since then, it dropped and then recovered. While the Euro is breaking six month highs against the dollar and the Aussie hits 2 year highs, the Pound falls short of returning to 1.60. Britain isn’t doing so well:

Despite rising inflation, some members of the Monetary Policy Committee prefer to renew the Quantitative Easing program and to print pounds. Employment is very fragile in Britain. Talks by MPC member Adam Posen about new QE contributed to this weakness.

In addition, the austerity measures taken by the new government will probably take their toll on growth. Without growth, inflation will probably ease and so will the currency. The impact of austerity measures is already strongly felt in other European countries. The worsening situation sends people to the streets there.

GBP/USD enjoyed the dollar’s fall, but only managed to reach 1.5923, before dropping again. Crosses are a different story.

EUR/GBP climbed every day in the past week,and reached a four month high of 0.87. The next levels to watch on the upside are 0.8780 and 0.8840. 0.8550 and 0.8440 are on the downside.

GBP/CHF is currently supported at around 1.5350, the lowest level in 20 months. 1.51120 is the far point on the downside, and 1.48 on the upside. The Swissy enjoys a safe haven status and also dollar weakness. The Pound doesn’t enjoy anything.

Also against commodity currencies, the Pound is falling. GBP/CAD, GBP/AUD and GBP/NZD are also on the fall.

Next week’s rate decision will be interesting to watch – any expansion of the QE program, or even a hint, will find the Pound vulnerable to further falls.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.