The pound offsets some of yesterday’s losses ahead of UK bond auction

March 13, 2013 in Forex Analysis



The pound offsets some of yesterday’s losses ahead of UK bond auction


Economic news (13 March 2013) – In today’s early session the sterling managed to recover slightly from its yesterday’s tumbling against the dollar when it reached a fresh low of $1.4837, unseen since June 2010. The pound was trading higher at $1.4953 at the time of writing as markets anticipate the sale of UK government bonds maturing in 2052.


During Tuesday trading the sterling was put yet again under huge pressure after the release of economic data indicating that January UK industrial and manufacturing production output fell much more-than-expected. The UK Bureau of National Statistics report left market makers surprised as it revealed a decline by 1.2% in industrial production for January, while the manufacturing report registered a fall of 1.5%. It is indicated that one of the main reasons for this decline is the closure of a North Sea oil platform and the subsequent loss in revenue which erased the growth accumulated during the previous month.


The pound has already become the worst currency performer this year on fears that the UK may enter into an unprecedented triple-dip recession. Some analysts say the decline is highly likely to continue as BoE signals for further quantitative easing if the UK economic data remains weak.

Analysts also commented that investors are more reluctant to sell the pound against the euro rather than the dollar on signs that the US economy is likely to recover more quickly than that of the Eurozone.


Technical analysis


At yesterday’s session the pound moved in the range of 1.4830-1.4910. This morning the currency pair was trading at 1.4925-1.4950.

Should the pound successfully overcome the resistance zone at 1.4930-1.4950, its aim will be reaching and testing the 1.4970-1.5000 zone. If successful, the upward trend will continue to 1.5020-1.5040. If it falls below the 1.4920-1.4990 support zone, the next support zone is expected to be at 1.4850-1.4820. In case of a breakdown, the downward trend will continue to 1.4800-1.4780.



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