Stock market growth boosts pound

02-13-2009 11:34

After three consecutive losses against the US dollar the British pound gained for the first time while Brittan´s stock market surprisingly went up. During the early trading session the FTSE (Brittan’s stock market benchmark index) rose by more than 1,5 percent before the pound also went up against the Japanese yen for the first time this week. The pound sterling benefited against the euro erasing its yesterday loss as a result of the reports showing that the EU new cars registrations dropped considerably in January.

The pound´s strength was a result of the Eurozone’s weakness as the German and French gross domestic product (GDP) declined in the last quarter of 2008 which exceed market analysts´ forecast. Against the fourth quarter of 2007 the German economy declined by 1.7 percent as the French economy shrank by 1 percent.

Although the situation of the world economy remains problematic it appears that investors are leaning toward the risky assets today. The Eurozone’s reports discourage most traders as the sterling is a high-yielding but not a very risky currency. It´s obvious that such a growth is not everlasting and for that reason Forex traders should remain cautious when trading a currency that recently suffered many problems.