Pound Falls as Concern for China’s Growth Spurs Risk Aversion

The Great Britain pound weakened today after the stocks dropped on the concern that the economic growth of China may slow, damping the demand for the currencies, considered being riskier.

The pound rose previously on the outlook that the emergency budget and spending cuts would reduce budget deficit without hurting the economic growth. Yet the concern, brought by the disturbing prospect for China’s economy, harmed many riskier currencies, regardless of the supportive domestic factors. MSCIWorld Index of shares dropped by 1.2 percent after the Conference Board released the revised economic index for China, which indicated the smallest growth in the five months in April.

Today’s news spurred the demand for the safety, causing the negative effect on the sterling’s performance. Nevertheless, the analysts say that the medium-term outlook for the currency is quite favorable.

GBP/USD traded at 1.5056 today as of 21:52 GMT after opening at 1.5104. GBP/JPY fell to about 133.26 from its opening rate of 134.98.

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