Sterling Gets Hammered Again

Sterling Gets Hammered Again
Sterling Gets Hammered Again

Economic data from the UK continues to deteriorate with a weak preliminary GDP number last Thursday of 0.1% (expected 0.3%).

The expected rate rise in May is looking less and less likely. Mark Carney (The Governor of the Central Bank of England) is sounding more and more gloomy the UK economy and whether it could handle a rate rise at this time.

An ongoing weak sterling is creating the illusion of growth as more expensive imports drive up prices (inflation). Central banks around the world obsess about reaching the miracle 2% inflation rate as if this is the driver behind wages. Is wage increases not the driver of inflation?

Helping our GBPUSD trade last week was a strong dollar which came into its own on Friday with advanced GDP q/q coming in at 2.3% (expected 2%). The trade was a classic case of trading a weak currency (GBP) against a strong currency (USD) creating a big move down on Friday on GBPUSD on Friday.

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