Could the U.K. Pound See Solid Gains in the Last Half of 2011?

Sterling expected to appreciate later this year

The U.K. pound is expected to see solid gains as we move into the second half of 2011. Indeed, sterling is the only major currency gaining against the U.S. dollar today.

One of the main reasons that the U.K. pound is expected to do well in forex trading on the currency market is due to the widening interest rate gap between the dollar and the pound.

Even the choppy equity markets and concerns about Greek debt default have been unable to send the U.K. pound lower in currency trading today, even though the loonie and euro are both down. Rangebound trading is expected, though, since the Independence Day holiday in the U.S. is resulting in low volume for the financial markets.

U.S. Dollar Forex Trading Forecast: More Weakness in the Near Term

Currency trading with the greenback

The U.S. dollar forex trading forecast, for the short term, is likely to see more weakness. Indeed, there are a number of factors likely to affect the greenback in currency trading during the near term. Action Forex offers 5 items undermining the U.S. dollar in forex trading:

1. Concerns about the U.S. debt ceiling, and a downgrade of the sovereign debt rating.

2. Rally of risk is pressuring the dollar as forex traders no longer feel the need for a safe haven.

3. Possible rate hike from the ECB could further pressure the U.S. dollar as forex traders look for higher yields.

4. The long holiday weekend in the U.S. could mean that assets flow elsewhere.

5. Technical analysis currently favors the euro in forex trading.

And, of course, there are long term considerations as well. The U.S. dollar is vulnerable as scrutiny will turn from Greece after the austerity vote guarantees another bailout. Now, focus will be on the U.S. and its debt problems, and that means that the dollar will be under pressure in the future.

Euro Zone to Get Help From China

Euro forex trading forecast looks up

Even though a bailout for Greece is widely expected, there are still concerns about the euro zone in general. Other countries, like Portugal and Ireland, still have debt issues. However, the euro zone might get some help from China.

China is pledging to buy European debt in an effort to keep the 17-nation currency zone running properly. China plans to invest in the sovereign debt market, to the tune of billions of euros.

Not only is the news helping in terms of providing help for the debt crisis in Europe, but the euro is getting a boost as well. If China turns more toward European assets, the U.S. dollar could lose some of its support.