The pound sterling goes on to wilt as the marketplace dumps the currency prior to year-end. Sterling was simply the worst-performing G10 currency yet again on Wednesday because of a downward revision in final 3rd quarter GDP data.

The Office of National Statistics modified Q3 GDP to +0.7% quarter over quarter from the earlier +0.8% reading and that had been more than enough to send the cable to a nearly one hundred pip drop. GBP/USD fell below the 200-day moving average for the first time since September. The Bank of England minutes failed to move the market regardless of a slight bias toward rising rates. The minutes exposed a three-way split for the third sequential month, as anticipated.

Seven of the 9 MPC members elected for no alteration of economic policy while Andrew Sentance voted to boost rates and Adam Posen elected to increase bond acquisitions. The overall tone of the minutes encouraged that voters are transferring towards Sentance’s side. “Most of those members considered that the accumulation of news over recent months had probably shifted the balance of risks to inflation in the medium term upwards,” the minutes said.

The Swiss franc goes on to outperform and it was the best G10 performer once again. The fundamentals drivers of the current move in CHF are not clear and flows may perhaps be driving the move. The likelihood, however, that there is a deep underlying interest in francs should not be eliminated. We feel that the long-term sovereign complications within the euro region will justify a bid for the CHF as a safe haven throughout the year ahead.

The top news from America on Wednesday was an upward revision to 3rd quarter GDP to an annualized pace of 2.6% from 2.5%. This is seen as a disappointment, however, because economists were planning on a revising to 2.8%.. The unexpectedly lower reading came due to a downward modification in individual usage from 2.8% to 2.4%. The slowing consumer spending is a bad signal for holiday spending. Inflationary data within the report proceeds to back up the Federal Reserve’s case for QE2. Core prices rose at a 0.5% annualized rate, the slowest since record-keeping started in 1959.

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