Pound Remains Bearish on Business Sentiment

The pound is having a disappointing performance this week being traded today in the lowest level since June on concerns that new Chinese industrial regulations will reduce demand for British assets, affecting the already weakened U.K. currency.

Today, to continue a sequence of negative reports in Great Britain, the business sentiment in the Kingdom had the sharpest decline for the second quarter in more than 2 decades, as the Bank of England is likely to extend its quantitative easing measures, forcing the pound down for the fourth day in a row versus most of the 16 main traded currencies. China’s announcement that it will restrict loans and regulate steel production also affected stock markets in the United Kingdom, influencing the already weakened pound, posting the longest losing streak in 2 months this week.

Both the international and the domestic economic scenario is decreasing attractiveness for the pound, as the Bank of England is proving itself ineffective to rescue the U.K. from the worst recession in decades and other economic regions are already providing solid evidences of recovery, like the South Pacific and in some countries of Europe like Germany. It’s hard to determine to what levels the pound will go, but the trend will certainly not be bullish.

GBP/USD traded at 1.6196 as of 13:18 GMT from a previous rate of 1.6237 yesterday. EUR/GBP climbed to 0.8799 from 0.8780.

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