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Forex: GBP/USD retraces gains to 1.5120

FXstreet.com (Barcelona) - Following the high at 1.5156 on the US CPI data, the pair eased gains throughout the NY session, but has been finding some support around 1.5120/25. The economic calendar is empty for the rest of the session.

The US consumer sentiment, gauged by the Reuters/Michigan Consumer Sentiment Index, dropped to 71.8 for the month of March, markedly lower than forecasts at 78.0 and February’s 77.6.

The Federal Reserve informed that the US Industrial Output posted a monthly expansion of 0.7%, surpassing estimates at 0.4% and up from 0.0% in January. In addition, Capacity Utilization rose to 79.6% from 79.2%.

“Yesterday's break above 1.4980 resistance signaled, that a bottom is in place at 1.4830 and the outlook here is positive above 1.5080 intraday support, for a rise through 1.5200, en route to 1.5330”, wrote Deltastock.com analyst Stoyan Mihaylov, pointing to crucial support at 1.4980.

S&P rise to 1600 requisite on steadfast US growth, USD wanes across the board

In light of the recent run-up in US equities, it bears the question if such an influx in returns is stable or additional growth is possible. Indeed, U.S. economic growth will have to accelerate to “ridiculously strong levels” to justify any advance for the Standard & Poor’s 500 Index (SPX) above the 1,600 level, wrote Jim O’Neill, chairman of Goldman Sachs Asset Management.
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Forex Flash: EU damage control highlights moral hazard – Goldman Sachs

The fact that a national stabilization policy should be sufficient in ‘normal’ times does not mean the crisis has not exposed some missing pieces in the toolbox of Euro area policy makers. According to the Economics Research Team at Goldman Sachs, “The main challenge policy makers have faced has been the issue of how to prevent a liquidity crisis for a country that was about to lose market access. Through the creation of the EFSF/ESM and the ECB’s OMT programme, policy makers have provided enough financial firepower to credibly backstop the periphery, and even other countries, should that be needed.” Policymakers have therefore created an option through which countries can increase their fiscal capacity significantly.
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