The British pound today recorded wide swings against the US dollar as it dropped to 8-week lows and rallied higher on US dollar weakness. The rally was mainly triggered by rumors originating from China, but was short-lived as the pound headed lower much later.
The GBP/USD currency pair started today’s session on a downtrend where it hit a low of 1.3482, but it rallied higher to hit a high of 1.3562 in the mid-European session.
The pound initially traded lower at the beginning of today’s session extending its overnight slide below the 1.3500 psychological mark following mixed UK macro releases. Britain’s industrial production for November came in at 0.4% on a monthly basis, which was higher than the previous 0.2%; the print translated into 2.5% on an annualized basis, which was higher than the expected 1.8%, but lower than the previous 4.3%. The country’s trade balance data released by the Office for National Statistics recorded a bigger deficit that expected at £2.8 billion in November versus the expected £1.5 billion deficit. The construction output was also lower than expected.
The greenback’s initial weakness was largely triggered by a news report that Chinese officials are slowing down or halting the purchase of US Treasuries. The US dollar later rebounded forcing the pair to retrace some of its gains.
The currency pair’s future performance is likely to be affected by tomorrow’s Bank of England credit report and US PPI and jobless claims data.
The GBP/USD currency pair was trading at 1.3540 as at 14:18 GMT having rallied from a low of 1.3482 earlier today. The GBP/JPY currency pair was trading at 150.96 having dropped from a daily high of 152.58.
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