Fundamental Headlines
• Futures Rise Ahead of Data, Bernanke Speech – Wall Street Journal
• European Shares Slip – Wall Street Journal
• SEC Vows More Action Over Crisis - Financial Times
• Bernanke Readies Jackson Address as Labor Market Weakens, Spending Slides- Bloomberg
• U.S. Index Futures Climb, Treasuries Fall on Fed Speculation; Yen Weakens – Bloomberg
GBP/USD: Economic activity in the U.K. expanded 1.2 percent in the second quarter from the previous reading of 1.1 percent. Meanwhile, the annualized rate was also revised higher, climbing to 1.7 percent from 1.6 percent. Going forward, the private sector may contribute less to Great Britain’s recovery as the economic outlook remains uncertain, while companies prepare for the impacts of the recent proposed austerity measures which will take place at the beginning of 2011. At the same time, comments by Bank of England’s policy maker Martin Weale has stirred some fears for GBP traders as he said the U.K. faces a “real risk” of a second recession. Indeed, high uncertainty regarding future growth may lead the split among central bankers in the U.K. to widen. As of late, Andrew Sentance is the lone dissenter, calling for a rate hike; however, a shift among committee members will likely occur in the upcoming months as the increase in the value added tax measures to 20 percent will place upward pressure on consumer prices next year. Not to overlook, total business investment unexpectedly pushed lower, providing further concerns for market participants as companies prepare for headwinds ahead. Taking a look at the currency markets, the GBPUSD is directionless going into the North American trade, and focus now turns to the U.S. GDP report.
Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast
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