Wednesday August 11, 2010 - 19:23:10 GMT
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Bank of England Lowers U.K. Growth Outlook
The British Pound is down over 1% at the
mid-session as worries about a slowdown in the economy are forcing investors to
wonder if the U.K.
economic recovery is slowing down.
Overnight the Bank of England lowered its
forecast for growth expectations in its quarterly inflation report. The BoE
cited declining confidence, tight credit conditions and the governmentâ€™s
planned austerity measures as the main reasons for the reduction in its
outlook. In May, the central bank forecast about 3.6% growth. The revised
number is 3%.
Although the U.K. Gross Domestic Product
was more than expected during the second quarter, a key central bank official
indicated that the total growth for the year would most likely average out.
In a statement, BoE Governor Mervyn King
said, â€śbusiness and consumer sentiment have shown signs of softening, measure
of financial fragility remain elevated, and there is great uncertainty about
the outlook for both the United
States and our most important trading
partner, the euro area.â€ť
This statement cast on pall on the British
Pound and the Euro, triggering hard sell-offs in both of these markets.
changed its daily trend to down on Tuesday when it took out its last swing
bottom at 1.5819. This morning it is testing a key 50% level at 1.5635.
Although an intraday technical bounce is triggering a small short-covering
rally, this level is not likely to hold. The major downside objective is an
uptrending Gann angle from the 1.4229 bottom at 1.5429.
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