The Sterling Drops To A Five Year Low Before Retail Data

Daily Forex Fundamentals | Written by Finotec Group | Oct 23 08 09:10 GMT |

The British pound traded near its lowest level in more than five years against the dollar before a report that will probably show retail sales dropped last month and the British economy contracted in the third quarter. 'I don't see anything that can stop this,' said David Woo, global head of currency strategy in London at Barclays Capital. 'It's shocking. I can't say we've anticipated this move.' Bank of England Governor Mervyn King also said this week the U.K. may enter a recession. A report tomorrow may show the economy contracted 0.2 percent in the third quarter from the previous three-month period. The GBP/USD is currently trading at $1.6315 as of 7:55am, GMT. The Japanese yen may strengthen 8 percent by next year to 90 per U.S. dollar as investors dump higher- yielding assets funded in Japan and bring their cash home, Barclays Capital said. The yen appreciated 8 percent against the dollar in the past year, the only gainer among the 16 most actively traded currencies versus the greenback. 'The main story is that risk aversion will encourage unwinding of yen carry trades,' said Toru Umemoto, chief currency analyst in Tokyo at Barclays Capital, Britain's third-biggest lender. ' This is coming from the risk of a global recession.' The USD/JPY is currently trading at 97.52 as of 7:42am, GMT. Economists at Deutsche Bank AG say the ECB will slash the benchmark rate to a record low of 1.5 percent by the middle of next year from the current 3.75 percent as the euro-region economy heads into a recession. European Central Bank President Jean Claude Trichet may need to show he's still willing to fight inflation after price expectations soared in the wake of the bank's Oct. 8th interest-rate reduction. The EUR/USD is currently trading at $1.2828 as of 7:55am, GMT. Economic Calendar Time (GMT) E Event Currency Period Previous Previous Significance 15:15 BOC Governor Carney Speaks CAD *** 14:30 Monetary Policy Meeting Minutes CAD *** 12:30 Jobless claims USD Weekly 461.0K 470.0K ** 09:00 Industrial New Orders m/m EUR Aug 1.0% 0.3% ** 08:30 Retail Sales m/m GBP Sep 1.2% 0.9% *** 08:30 BBA Mortgage Approvals GBP 21.1K ** 08:00 Current Account EUR Aug -1.7B -5.0B ** Finotec Group Inc. http://www.finotec.com/ Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.