Saturday, May 12, 2012

Pound Drops as Consumer Confidence Worsens

The Great Britain pound declined after a report showed that confidence of Britons worsened last month, spurring speculation that the Bank of England will be forced to perform quantitative easing.
Nationwide Building Society reported that the Consumer Confidence Index fell from 53 in March to 44 in April. Estimates before the report predicted the index to remain stable at 52. Robert Gardner, Nationwide’s Chief Economist, said:

It is not surprising that confidence remains fragile, with the economy shrinking over the past six months and labour market conditions still weak.



He added:

Looking forward, there are a number of one‐off factors that are likely to impact confidence in the months ahead. News that the UK dipped back into recession at the start of the year may further depress sentiment in the near‐term.

Britain’s central bank refrained to ease its monetary policy on May 10, but it does not look like the UK economy can go forward without stimulating measures. Speculators priced in QE and the pound suffered from it.

GBP/USD fell from 1.6143 to 1.6070 and GBP/JPY slid from 128.99 to 128.43. EUR/GBP went up from 0.8010 to 0.8033.

If you have any questions, comments or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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