British trade balance came out worse than expected, and the rate decision brought no news – except that yet again, the bankers couldn’t agree on a joint statement – the pound is pounded. Update.
British trade balance came out weaker than expected – a deficit of 8.5 billion pounds instead of 8.1 billion that was predicted. Also, the figure for the previous month got a downgrade – from 8.2 to 8.4 billion
GBP/USD now trades at 1.5750, after touching the 1.5840 line earlier in the day. Support is found at 1.5720, but this is only minor support. The 1.5650 line is much more important. A significant line of resistance above is at 1.60 – a round number that also served as resistance.
For more technical analysis for the pound, check out the GBP USD forecast.
Cable is falling also due to risk aversive trading that is seen across the board – the dollar is strengthening across the board, continuing the trend from recent days, after taking a small break during the Asian session.
The rate decision is due soon in Britain – the MS is split three ways between the majority which is expected to vote for an unchanged interest rate and no new allocation of funds for quantitative easing, and between two members that have a different opinion – hawk Andrew Sentance which wants a rate hike to curb inflation and dove Adam Posen who wants an additional 50 billion pounds of QE to fight unemployment.
Mervyn King, the head of the BoE, seeks “truce” after bad publicity. It will be interesting to see if there will be an accompanying statement. No statement means a big divide within the bank, and it could further weaken the pound.
Update 12:00 GMT: As expected, no change was made in the interest rate or the quantitative easing program, and indeed, no statement was made.
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