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By HaleStewart February 18, 2014 8:56 am
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Pound Breaks Through Resistance; But Beware US Weather Influences

Above is a chart of the pound/dollar.  For most of February, the pound has been rallying versus the dollar, rising from a low of ~1.63 to a high of ~1.68 for a total trough to peak gain of about 3%. 

The reason for this move is the strength of UK data over that in the US.  But a key to remember here is US data has been weak because of seasonal factors -- most notably the harshest winter in a very long time.  This has been reflected in weaker than anticipated auto sales (who wants to buy a car when they're literally freezing outside?), industrial production, weaker ISM manufacturing readings and slower than expected employment growth.

Once the US thaws out, there is a good possibility its data will return to stronger numbers.  In fact, it's possible we could see a "catch-up effect."

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

 

 

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