The pound posted its first day of losses versus the U.S. dollar this week as explosions in Jakarta, the capital of Indonesia, attracted investors to the safety of the greenback, stopping a five-day rally that brought the pound up on renewed economic hopes.
The pound was affected by two facts towards the end of the week as the optimism that made it rally versus the greenback slowly faded, forcing investors back to the safety of the yen and the dollar. Complications regarding the future of CIT Group Inc., were the first factor that moved markets trends this week, as an eventual bankruptcy of one of the biggest financial groups in the world would certainly raise concerns on the future of the global economy. Today, an orchestrated attack in Jakarta, exploding simultaneous bombs in two different hotels brought Asian markets down, and once again, increasing appeal for safer positions in the United States.
Currency specialists explain that the pounds decline occurred due to market sentiment changes, which was previously favoring the pound with optimism, and now is once again risk averse, favoring currencies like the yen and the dollar. U.K.s fiscal balance deterioration is also warning traders about further problems that may occur in Great Britains economy, adding negatively to the pounds outlook.
GBP/USD traded at 1.6303 as of 10:19 GMT from a previous rate of 1.6450 before Jakartas blasts. GBP/JPY fell to 152.81 from 154.45.
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