By James McKee – In a surprise development the growth of US GDP has outpaced that of England, in fact England’s GDP has dropped over 30% overall. Such stark differences certainly make the case for looking into the USD|GBP pair. The UK’s trouble is only beginning though because the country’s export demands are dwindling and the country’s austerity measures are truly having a large impact. In the US a strengthening stock market combined with an optimistic G20 summit could spell out some serious gains in the coming months.
In regard to the GBP investors should pay careful attention to the country’s construction sector as well because it is one of the few areas that seems to be making any gains whatsoever. The Chancellor of England stated his intent to cut public spending by 81 billion dollars overshadows the construction market, such cuts certainly seem like a joke in America but in England that is big money. If these cuts do take effect England could be looking at riots and social upheaval similar to what has been occurring in France and Greece.
In the end what separates the US from the UK in this instance is the simple fact that the US is focusing closely on any way they might be able to increase their exports and bring jobs back to America. President Obama has already said that he is going to be offering American corporations tax incentives to bring jobs back to America from overseas companies. Bringing jobs back to America and making an effort to balance export numbers with import numbers would greatly improve the US economy. This would in turn have a great effect on the USD, only time will tell if these measures are the best course of action but it is certainly better than no action at all.
The USD has been bearish and probably will be for the next couple months until Australia and other country’s GDP reports have been made public. Until this time it is probably best if we all give the USD a rather wide berth with regard to hasty trading, watch any interaction you have with this currency very carefully. Happy Trading!
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.
