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British currency (Pound Sterling, GBP) in forex
It seems that recently the euro has given the US dollar a sound licking. However, the British pound has not followed suit. The pound sterling has gone through various crises which includes not only the US housing woes but also the weak global equities market. The pound has further deteriorated due to a resurgence of Foot and Mouth disease.
The stock market's weakness has further damaged the financial services-driven British economy. When you think of it, the Forex market has taken a beating worldwide. Credit continues its downward spiral, and it becomes harder to get. It is hard to visualize that the subprime problems that the United States has are beginning to negatively affect Great Britain's banks as well as the Forex market.
A mixed picture has been painted regarding economic reports about Great Britain. The growth of retail sales has only risen a meager 1.2%, and this has been the lowest level since November.
The pound sunk to a two-month low against the euro as well as two straight days against the US dollar. The concern in the Forex market is that 5 consecutive interest rate hikes may be putting the skids on the British economy. It would seem that the reemergence of Foot and Mouth disease would play a big part into all currency traders who were trading the British pound on the Forex market.
If FMD is not contained, then the British pound is subject to sinking. The last FMD outbreak saw the British economy lose 10 billion pounds. Meat prices saw a 5% rise and inflation rose a modest 0.1%. An analysis of the Forex market seemed to make things even worse. GPBUSD saw a drop of over one thousand pips. All of those who trade in the Forex market should be wary not only of the currency market, but they should also keep a watchful eye about further developments of Foot and Mouth disease. This will determine how the market plays out for the British pound.
The lack of confidence that has been brought about in the equities markets has brought major shifts in the Forex market. The British pound took its largest fall in the past five months. Since May of 1981 the British pound reached its highest level since July 24th. The euro as well as the pound when compared with the Japanese yen took major hits.
If you ever decide to do some trading in the Forex market, be sure to keep your eyes on the British pound and how it does against the US dollar and Japanese yen.