GBPUSD

Still Correctively Bullish

GBP - Sterling is lower against most of its major counterparts after a report showed that British consumer confidence fell last month as the economy slipped into a double-dip recession. The GBP fell for the first day in six against the EUR as signs the British economy is faltering prompted investors to increase bets that the BoE will ease policy further.

4HRS

USD - The dollar is headed into the weekend mixed against its major counterparts as financial markets close out a tumultuous week of trading. While stocks have staged a comeback from early losses, commodities remain under pressure on continued fears that the broader global economy is headed for contraction. Equities began the day sharply lower after JP Morgan announced a $2B trading loss with a warning of further shortfalls to come, thus raising questions about the health of the banking sector. However, data this morning has proved supportive as investors bet that the Fed will soon be spurred into action. After the unexpected drop in import prices earlier this week, PPI contracted by 0.2% versus a flat reading last month. Producer prices are on pace for a 2.7% gain this year, down from 2.8% in the previous reading. With next Tuesday's CPI report likely to reflect easing inflationary pressure, the Fed may have the room necessary to pursue another round of quantitative easing. Fed Chairman Bernanke told senators this morning that the economy faces serious challenges ahead with the scheduled end of tax cuts and extended unemployment benefits as well as a variety of budgetary cuts set to take affect at the beginning of next year. Bernanke stated that "if no action were to be taken...the fiscal cliff is so large that there's absolutely no chance the Fed would have any ability whatsoever to offset that effect on the economy." With such road bumps ahead, the Fed may become increasingly proactive in the second half of the year.