Pound Tumbles Due to Aftershock of U.S. Treasury Speech

The Pound slid against it major currency pairs as it felt the shockwaves of the Pessimism in the U.S. following the disappointing speech about a banking bailout by U.S. Treasury Secretary Timothy Geithner. The British economy and British currency are extremely volatile due to negative news from the U.S. and Europe, as their economy has been hit worse than many other countries in the developed world since the start of this recent recession. For example, Britain’s GDP is expected to decline the most out of the G7 nations, by over 2.8%, according to the International Monetary Fund (IMF).

The GBP slid by a staggering 350 pips to 1.4481 vs. the USD. It slid by 220 pips vs. the EUR, against the JPY it slid by an enormous 430 pips to 131.19. These large losses show that investors returned to safe-haven currencies in yesterday’s trading sessions. The thing that this shows forex traders is that the Pound acts very negatively to uncertainty in the financial world. Therefore, a lesson for the future may be for investors to follow U.S. news events more closely, and use the GBP as bait. This is useful because the Pound is very volatile to both positive and negative economic news coming from the U.S.