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?
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