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Another Week of Weakness for Sterling?

February 25, 2014 at 2:25 by Vladimir Vyun

Stack of coins on 10-pound and 20-pound billsThe Great Britain pound for a long time has been one of the top performers on the Forex market, but last week it became a loser. Will the currency continue to lose this week or the last week’s drop was just a short-lived correction?

The most important event for the sterling this week should be the release of Britain’s gross domestic product estimate for the fourth quarter of 2013. It will be the second estimate, and analysts think that it will remain unchanged from the advance value of 0.7 percent. A positive surprise can boost the UK currency. Conversely, a negative surprise will drive the currency even lower.

This week is relatively quiet in terms of economic data. GDP reports from the United States, the European Union, Switzerland, and Canada will be other major data that may affect the performance of the pound against currencies of these countries.

Traders will continue to listen to UK policy makers, hoping to understand their view on the current economic situation and their plans for future monetary policy. Mark Carney was cautious last week, saying that he does not want to endanger recovery. Other members of the Bank of England were bolder, voicing opinion that expectations of an interest rate hike next year are not unwarranted.

Yet the last week’s poor economic data left sour taste, making analysts view the future of the sterling with pessimism. DailyFX is outright bearish on the currency and says:

Our Senior Technical Strategist highlights the fact that the GBPUSD formed a potentially significant weekly key reversal. The fact that it has fallen so consistently after registering fresh multi-year highs warns that the exchange rate could soon turn lower.

Forex Crunch is less pessimistic, saying:

The pound hit some turbulence last week but still remains at high levels.

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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