Good Week for Pound, Yet Outlook Remains Uncertain

The Great Britain pound rose this week as the favorable GDP report and the improving consumer confidence caused the speculation that the central bank wouldn’t introduce the additional stimulus to support the economy.

The UK gross domestic product rose twice the forecast value and the consumer confidence improved, while it was predicted to decline. The favorable reports improved the outlook for Britain’s economy somewhat. The pound erased the losses of the last week against the US dollar and ended the five-week losing streak versus the Japanese yen.

The favorable outlook for the UK economy isn’t certain. There were poor reports this week, including the report about the mortgage approvals and the home price index. The analysts think that the confidence of the Britons may drop when they fully realize the implications of the budget cuts.

GBP/USD advanced from 1.5663 to 1.6022, while GBP/JPY went up from 127.44 to 128.94.

Forex Trading Forecast for Next Week, Oct.18

US Dollar on the Verge of Reversal and in Need of a Catalyst

Euro’s Late Reversal May be Start of Larger Correction Against Dollar

Japanese Yen Threatened as Fed QE Hopes Stoke Risk Appetite

British Pound Awaits Bank of England Minutes For Direction

Canadian Dollar may Lose its High Yield Appeal after a BoC Hold

Australian Dollar Rally May Falter On Comments From RBA, G20

New Zealand Dollar at Risk for Large Correction Versus US Dollar

Gold May Lose Luster As Markets Question Scope of Fed Actions

Another Week of Dollar Weakness on Talks About Easing

This week was marked by the talks about the possible quantitative easing by the US Federal Reserve, the talks which were further fueled by the unexpectedly poor report about the US employment. In such environment the dollar has no choice but to go down.

The unexpected cut of 95,000 jobs by the US employers added the incentive for the Fed to start next round of the bonds purchases to stimulate the US economy. The price of the US currency dropped as the traders expect the inflow of new dollars into the economy. The analysts speak about interesting effect all this talks about the easing may have: when the actual quantitative easing occur it won’t cause much impact on the dollar price. The stimulus simply already priced in, so there’s no reason for the dollar to react even more.

The dollar fell for the fourth straight week against the Swiss franc, the euro and the pound. Against the yen it dropped for the third consecutive week, going below the 82 yen-per-dollar level for the first time since 1995. The greenback declined for the sixth week against the Canadian dollar for the seventh week versus the Australian dollar.

USD/CHF opened at 0.9753 and closed at 0.9638 this week after declining to 0.9554. USD/CAD went down from 1.0194 to 1.0112. AUD/USD rose to 0.9859 after opening at 0.9725 and falling to the weekly low of 0.9541.