The Great British Pound’s Weakness in the Forex Market

The GBPUSD has been quite the sight to see since January.

Falling close to 1500 pips already in 2013, along with horrendous economic figures, many fear the UK has slipped into it’s third recession since the 08′ financial crisis.

Take a look at the GBPUSD falling to 2.5 year lows – click to enlarge
gbpusd_weekly

Official data released on Tuesday showed manufacturing production is down 1.5% in the UK from last month. Weak production figures have been a huge component in the economy’s weakness. Recently the Bank of England decided to not add a fresh round of QE, but in result of Tuesday’s economic figures, there are refreshed expectations of further UK quantitative easing in the near future.

“This is the penultimate nail in the coffin in terms of triple-dip – it’s pretty much game over now,” said economist Alan Clarke at Scotiabank (Reuters)

The fact alone that the UK is heading into a third recession is enough to keep investors short on the GBP.

It is also worth noting that U.K. inflation expectations are the highest since September 2008 according to “World First”.

The cause of the evident GBP weakness and the JPY weakness in the Forex Market is not just these currencies weaknesses, it’s also a result of the U.S. Dollar’s strength. Therefore, this week, with about 20 United States economic news events, we could see a lot of continued volatility in the GBPUSD and USDJPY.

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