Tuesday October 26, 2010 - 22:38:07 GMT
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British Pound Rallies on Better Growth Prospects
The GBP USD is up nearly 1% at the
mid-session after a stronger-than-expected economic report signaled growth.
This news reduced the prospects for further easing by the Bank of England,
therefore, driving up the value of the Sterling.
For a couple of weeks, the Cable has been
under pressure on speculation that the BoE would be forced to implement a new
round of quantitative easing due to new tax increases and fresh spending cuts.
The BoE has been hinting that additional
asset purchases would be necessary to prevent the economy from derailing,
sending it into a possible double-dip recession.
The initial boost for the British Pound
came after it was reported that the U.K.â€™s third-quarter gross domestic
product grew 0.8% versus the previous quarter. An additional surge in the Sterling was attributed to the S&P Corpâ€™s revised
credit outlook for the U.K.
The credit reporting agency changed its outlook from negative to stable, citing
the governmentâ€™s willingness to cut spending as the main reason for the change.
Technically, the GBP USD completed a 50%
correction of the break from 1.6106 to 1.5650. This price is 1.5878. Further
upside action could drive the Pound into the Fib retracement level at 1.5931
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