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Wednesday, 22 March 2017

Market Influencers and their Impact Part 2

The other major currency up for discussion is the British Pound. The currency is the strongest in the world based on trading prices although USD is the most widely used. It is stronger than the Euro and the USD which makes it something to look at during your trading. The London trading session overlaps the New York session by approximately four hours. Within this time period there is normally a huge amount of volatility which is welcomed by many traders but can blow away others. Below we will focus on some of the key economic events that might trigger the Pound to behave erratically. Keep in mind that the following events are only a few that happens and as such you should always check your economic calendar before trading. A good one can be found at

Bank of England

Mark Carney the current and 120th Governor of the Bank of England is a Canadian with huge powers over monetary policies as he is also the chairman of the Monetary Policy Committee. He has a major role in guiding national economic and monetary policy and is therefore one of the most important public officials in the United Kingdom.

Mr. Carney is the UK's equivalent to the USA's Janet Yellen which his speeches are watched carefully by traders over  the world as they carry much weight on the GBP. His speeches can cause almost immediate reactions and send the currency either spiraling out of control or climbing way out expected range.

Manufacturing Purchasing Manager's Index

If a country doesn't produce then it is dependent on imports which drives the currency down and inflation up. Manufacturing is a key indicator to the health of a country's economy. UK is a major manufacturing country and each months the previous month's data is released. The Manufacturing Purchasing Managers' Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.

Prime Minister

Theresa Mary May is the Prime Minister of the United Kingdom and Leader of the Conservative Party, having served as both since July 2016. She has been the Member of Parliament for Maidenhead since 1997. She assumed office on 13 July 2016, following the resignation of David Cameron. She is the first female prime minister since Margaret Thatcher.

Similarly to the president of the USA, the Prime Minister of the UK has a great influence over the direction of the Pound Sterling. Her speeches normally have traders listening keenly to her addresses and any inclination of something that might be taken as a negative impact on the economy will send the pound down while anything positive will send it up.

Gross Domestic Product

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy's health.

A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.

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