Sterling has been rising steadily against the dollar half way into the European trading session as Bernanke’s speech is drawing closer and investors are adjusting positions in preparation for the event scheduled for later today.
Cable was little changed after the release of the second estimate of GDP for the U.K. in the second quarter which was in line with expectations. The Office for National Statistics reported that UK growth was 0.2 percent as predicted.
Markets quickly shifted their focus back to Jackson Hole, Wyoming where U.S. Fed Chairman is due to speak at 1400 GMT. At the beginning of the week there was speculation that Bernanke will signal further quantitative easing to revive the ailing U.S. economy. However, there have been mixed views now and some believe this will be unlikely.
Many market players are looking at Bernanke’s speech as a policy announcement although it is not. But if he mentions something relative to saying that the Fed is ready to do what is necessary to stimulate the economy then this will be interpreted as quantitative easing and there will be a dollar sell off.