GBP/USD Remains Under Pressure on Speculation PM Brown Will Resign

GBP/USD remains under pressure, after strong selling emerged on Thursday with some of the decline linked to rumors that PM Brown was going to resign and sales also linked to unwinding of GBP hedges after the failure of the Rio Tinto-Chinalco deal. GBP/USD has managed to find support ahead of 1.6100 in Asia, with lows of 1.6106, but bounces have been shallow and limited to only 1.6150 while in contrast, EUR, NZD and AUD have held a better bid tone through the session. Speculation that Gordon Brown will quit has not abated, particularly after a third minister resigned and called for Brown to resign. The UK economy remains weak with new car sales falling 24.8% y/y despite the scrappage scheme to buy old cars. More jobs are seen at risk in the UK from the failure of Ireland’s Newcourt, which will impact 3,000 jobs in the region. Resistance on GBP/USD is now at 1.6200 with risk for a fall under 1.6000.