Daily Futures Commentary July 13, 2009

Monday, July 13, 2009

September British Pound

September British Pounds are called lower this morning based on the weak overnight trade. Trading can be described as defensive as investors are becoming more risk averse during this time period when U.K. stocks are weakening and the economic picture remains bleak. The sell-off overnight highlights the fact that traders are becoming more sensitive to the weakening equity markets and more attracted to safe-haven currencies like the Yen and the U.S. Dollar.

The weakness in this market began in late June following a report by the Organization for Economic Cooperation & Development said U.K. Gross Domestic Product (GDP) would most likely contract 4.3% this year. Selling pressure continued after the International Monetary Fund warned that the U.K. is not in a position to budge for another stimulus plan. Finally, it was reported by the Sunday Times that Lloyds would take additional write downs. This is leading to speculation that the banking industry may still be experiencing problems which could send the U.K. economy into a double-dip recession. Traders are expressing no confidence in an economic revival and the general …
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