10 Jul 2013
Flash: GBP/USD plunge still looms – Investec
FXstreet.com (New York) - “It appears that GBP escaped a deeper plunge yesterday as weaker than expected manufacturing figures and the widest trade deficit in six months.” notes Lee McDarby, Corporate Treasury at Investec.
Indeed, the movement pushed the GBP/USD lower to teeter on the brink of the key long-term technical level of 1.4830 as investors used the weak figures as an excuse to sell sterling. UK manufacturing was very disappointing showing a 0.80% decline on the month in May against expectations of +0.40%, whilst industrial production was flat on the month.
This acted as a stark reminder that despite the run of more encouraging figures recently, in particular the survey data last week, the UK economy is still far from out of the woods. The market ran for the exit door of their GBP positions, which sent GBP/EUR to its lowest point since March in the low 1.15’s and GBP/USD to the low 1.48’s. According to McDarby, The significance of the GBP/USD move is that there remains a lot of market chatter of a clean break below 1.4830 will send the rate spiraling eventually towards 1.4200.”
Indeed, the movement pushed the GBP/USD lower to teeter on the brink of the key long-term technical level of 1.4830 as investors used the weak figures as an excuse to sell sterling. UK manufacturing was very disappointing showing a 0.80% decline on the month in May against expectations of +0.40%, whilst industrial production was flat on the month.
This acted as a stark reminder that despite the run of more encouraging figures recently, in particular the survey data last week, the UK economy is still far from out of the woods. The market ran for the exit door of their GBP positions, which sent GBP/EUR to its lowest point since March in the low 1.15’s and GBP/USD to the low 1.48’s. According to McDarby, The significance of the GBP/USD move is that there remains a lot of market chatter of a clean break below 1.4830 will send the rate spiraling eventually towards 1.4200.”