Monday, 12 September 2011

Worst Week for Sterling in Nine Months

Great Britain book published this week the biggest weekly fall against the U.S. dollar nine months of speculation that the fragile UK economy will force the central bank to keep interest rates at historic low.

Virtually all the key data this week was negative for the pound. Whether house prices, industrial production or the producer price index, all the signal indicators on the worsening state of the British economy. Not surprisingly, the Bank of England kept its policy very stimulating, but also reinforces the pessimistic view on the future of the UK economy and currency.

The pound was in decline against the dollar and the yen for almost a week and will publish the third consecutive weekly decline. The currency also weakened against the euro in the first half of the week, but strongly advanced in the second half as concern for the problems of the European Union intensified.

GBP/USD dropped from 1.6150 to 1.5878 over the week. GBP/JPY slipped from 124.20 to close at 123.20. EUR/GBP fell from 0.8765 to 0.8598, the lowest level since March, after it rose to 0.8842 earlier this week.

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