The British Pound had a marvelous performance this week. It broke upwards against the dollar and the Euro, and showed some positive economic news for a change. Will Britain emerge quickly from the crisis?
GBP/USD is now trading at 1.4820, a price not seen in a long time. This is higher than last week’s peak, and a break of the downtrend resistance. Downtrend resistance began on a peak in December 17th,formed on January 9th, and reconfirmed on February 9th.
With this week’s move the downtrend was broken. It was broken with much caution, but this does indicate a change. The next target is the round number of 1.50, a hard psychological line.
This technical break is backed very well by fundamentals: there has been lots of positive news from the UK in the past week:
- Mortgage Approvals have risen to 39K, beating expectations of 34K.
- GfK Consumer Confidence was only -30, more than -35 of last month and of expectations.
- Manufacturing PMI made a big surprise by rising to 39.1, rather than 34.9
- Nationwide HPI made the biggest surprise by rising 0.9% rather than falling. British real estate climbing? Really?
- And also today’s Services PMI rose to 45.5 instead of 43.6 that was expected.
All of these indicators are major figures. I look closely at housing figures, since the real estate bubble in Britain is one of the main causes of this recession.
In previous posts I had a strong anti-Pound sentiment, after seeing so many economic indicators being terrible. I even suggested that the Pound could reach parity with the dollar. Troubled British banks also hurt the Pound. Needless to say, I was seeking for EUR/GBP over and over again. This week, the Euro was mixed and the Pound rallied.
I must admit that I was wrong, and currently the British Pound can lift its head. Will Britain emerge from the crisis quickly? Is the leadership in Britain capable of bringing this change?
What do you think?