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UK GROWTH BEST SINCE 2006 BUT GBP OUTLOOK UNCERTAIN

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UK GROWTH BEST SINCE 2006 BUT GBP OUTLOOK UNCERTAIN

Feb 24 2015, 9.54am GMT

STOCK.com

The latest Lloyds bank International Financial Outlook report predicts sharp movements for GBPUSD.

With a volatile market at present, traders are in the optimum position to take advantage of intraday movements. GBPUSD saw losses for sterling in January but since then, the pair have reversed and the pound tracked up 3% on Monday.

The Lloyds bank International Financial Outlook report from late January notes, ‘Uncertainty around the outcome of the General Election in May raises the possibility of sharp movements in UK financial markets. In addition, depending on the result the possibility of an EU referendum in 2017 could create further market uncertainty.’

The lows of 1.50 seen earlier in the year were supported and reversed by a rise in oil prices and the bringing of interest rate hikes forward from summer 2016 to the 2016 new year.

GBPUSD currently stands at 1.54 on Tuesday but oil has reversed its recent upward trend and may effect immediate currency prices as the U.S benefits from lower energy imports, depending more and more on its domestic supplies particularly in shale output.

In the meantime, with key rate hikes due in the U.S this year, the GBPUSD is expected to make another sharp decrease in June.

The report noted that, ‘Barring a major surprise in the UK GDP data to be announced on 27th January, the economy starts 2015 on the back of four consecutive quarters of above trend growth for the UK economy. This is the equivalent to GDP growth of 2.6% over the last year (its best performance since 2006), representing the strongest growth in the G7.’ Additionally, ‘For 2015, we’re predicting another strong performance with growth little changed. A buoyant labour market, rising real wages and a continued recovery in business investment should help to offset some of the headwinds facing the economy.’

MT4 chart: GBPUSD

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