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GBP USD

The GBP/USD gave up 23 points today to trade at 1.6722 as the US dollar recovered from its harsh fall on Friday. The pound minimized losses after manufacturing PMI printed better than expected at 56.9 showing a continued expansion in the UK manufacturing sector. Analysts estimate that UK factory output improved fairly optimistically during February at a rate of 56.5; a score in this region could be seen as another signal that the British economic revival is here to stay. Sterling is liable to depreciate if the Purchasing Managers Index falls below 56.0, however, the Pound could easily find itself climbing the currency ladder if the index rises towards a fresh 3-year high of 58.2.

Sterling asserted itself above a key technical resistance level against the US Dollar on Friday due to a disappointing downward US GDP revision. Prior to Friday’s figures it was believed that the American economy grew at an annualized rate of 3.2% in the fourth quarter of 2013, however, the report showed that the world’s largest economy only actually expanded by 2.4%; this softened demand for the greenback. Other US data releases printed more positively: the Chicago Manufacturing PMI rose from 59.6 to 59.8 and the University of Michigan Confidence Index climbed from 81.2 to 81.6.

The Dollar declined as speculation grew suggesting that the Federal Reserve could ease off on its policy of tapering asset purchases. However, it is more likely that the Fed will continue to reduce stimulus and for this reason GBP/USD could quite conceivably come under some selling pressure over the next few weeks.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.
 
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