The Great Britain pound returned to its declining trend today even after the big positive opening gap this week. Analysts believe that this year may become the pounds worst since 1992.
Traders bet that the British currency may continue its sharp decline this year and lose 20 percent more against the U.S. dollar. The pound has already lost 10 percent against the U.S. currency since January. Futures trades show the most bearish market sentiment since 1992, when George Soros broke the Bank of England.
Housing crisis in the U.K. surprises many investors by its scale. According to the Chancellor of the Exchequer Alistair Darling the United Kingdom economy is entering its worst slowdown since the World War 2. This is a strong and clear signal for the future Bank of England interest rate decisions.
The situation is worsened with the accelerated consumer inflation that reached 4.4 percent in July. BoE is prompted to cut rates as fast as possible, but the fear of the price growth prevented them from reducing the interest rate last week.
GBP/USD fell from 1.7872 to 1.7667 as of 13:36 GMT today; interestengly enough, its still above the last Friday close level. GBP/JPY opened at 194.77 today and is now trading near 191.18 — but still almost 100 pips above its last week close. EUR/GBP rose just a little today — from 0.8042 to 0.8054, trading just above its technical support line near 0.8016 level.
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