GBPUSD Movement
For the 24 hours to 23:00 GMT, GBP fell 0.03% against the USD and closed at 1.5986, after Bank of England policy makers signalled they are concerned over the growth outlook.
Bank of England Governor, Mervyn King stated that the central bank is developing a contingency plan to deal with the aftermath of a possible sovereign default by Greece.
Additionally, policymaker, Spencer Dale stated that there are merits to raise the quantitative easing further, given the fragility of the recovery. But, he pointed out that the upside risks to inflation is a major concern. Meanwhile, David Miles warned that renewed tightening of credit conditions could inhibit demand for businesses. Bank of England Monetary Policy Committee (MPC) member Adam Posen stated that current MPC policy is not doing enough to stimulate the economy and more should be done.
In the UK, the gross domestic product, on quarterly basis, increased by 0.5% in the first quarter of 2011, compared to 0.5% decline in the last quarter of 2010. The current account recorded a deficit of £9.354 billion in the first quarter of 2011, compared to £12.956 billion in the last quarter of 2010. Additionally, the total business investment declined by 3.2% in the first quarter of 2011, compared with 0% growth in the previous quarter.
The pair opened the Asian session at 1.5986, and is trading at 1.5993 at 3.00GMT. The pair is trading 0.04% higher from yesterday’s close at 23:00 GMT.
The pair has its first short term resistance at 1.6055, followed by the next resistance at 1.6117. The first support is at 1.5921, with the subsequent support at 1.5849.
The pair is expected to trade on the cues from the release of data on money supply and consumer credit in the UK.
The currency pair is showing convergence with its 20 Hr and its 50 Hr moving averages.
