Forex Pound Forecast
Forex Managed Accounts Eur / usd Outlook 2008 01.03
The U.S. dollar was the big story in 2007 – if you were selling. Compared with 2001, the value of the dollar has fallen by 40 percent against the euro. And the values at the beginning compared with the end of 2007 were significantly down, the dollar fell by 13 percent against the euro, 10 percent against the yen and 8.5 percent against the pound sterling. Its value was at a record low that supermodels and popular rappers made public their preference for getting paid in euros, not dollars, please. The U.S. dollar prevented the drag toward the end of 2007, but the question is now: the dollar has bottomed out or that the slide will continue in 2008?
Why the dollar weakened in 2007
The dollar seemed so weak 2007 because the rest of the world economy continued to grow even if U.S. growth stalled, partly due to the constant demand from the Middle East, China and the markets of India. Countries acted more independently, as evidenced by the decision by Australia's central bank raising rates to avoid inflation, precisely at the time of the U.S. Federal Reserve was cutting interest rates. By December, in fact, the interest rate cuts happened only in the U.S.. In summary, a kind of dissociation occurred in the global economy, and this was key to the strengthening of other currencies and the weakening U.S. dollar.
There is evidence, at the beginning of 2008, the phenomenon is no longer go to this year and the global economy once again in step approach. In the second half of 2007, economic growth in the UK and Canada slowed suggesting that both countries were being overwhelmed by the weak U.S. for the economy. In addition, shock waves the crisis in U.S. subprime mortgages have also shaken the financial markets of many countries, particularly the UK, where growth has depended in the past years in housing, mortgages, and the public sector. There are also signs of tension in the euro area, despite the hard-line stance of the ECB monetary policy. The pressure to cut rates will increase if growth continues to weaken further in the U.S. or other countries. The pressure and forced the UK Bank of England to cut rates in December and more cuts forecasts for 2008.
Interest rate cuts will The thing to watch in the Forex Market. The U.S. Federal Reserve has already lowered interest rates 100 basis points in 2006 and a further reduction will be more in line with expectations, but if the euro area starts to lower rates, this would be a significant departure from current policy, which could signal an important change in prospects for the euro.
When U.S. Economy will
The big question is whether the U.S. economy is entering a recession, which would a serious impact on global growth. The majority of the American public believes the economy is already in recession, according to polls released in December. Public perceptions notwithstanding, economists think otherwise. A Business Week survey of 54 economists in December showed that the group believes the country is reflected growth of 2.1 percent by the end of 2008 (which registered 2.6 percent growth in 2007). They believe that, although the first half of 2008 will be difficult, spending the consumer does not stop, although more moderate. Basically, the forecast of recession is based on the assumption that the Federal Reserve will continue its round rate cuts. Although financial losses in the field of high-risk mortgages continue, consumer confidence will depend largely on the actions Reservations Federal support economic recovery.
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Forex Fundamental Analysis Forecast for the Pound, October 2009