The sterling fell by 0.71% against the greenback this week as global equity markets remained in consolidation after last week’s massive swings fueled concerns regarding the health of the global economy. The pound was markedly lower against all its major counterparts save the Swiss franc, which fell more than 2% this week after rumors of an SNB imposed deposit charge saw traders aggressively sell the swissie. The gainers are highlighted by a 3.3% advance in the kiwi which remained remarkably well supported despite the substantial swings in sentiment seen over the past few sessions.

Economic data out of the UK this week was highlighted by the 2Q GDP print which showed the pace of growth slowing to 0.2% q/q from a previous print of 0.5% q/q. The year on year figure was even bleaker with read of 0.7% from a previous print of 1.6% y/y. The data saw interest rate expectations from the Bank of England continue to diminish as fears that the economy may slide back into recession take root. With the BoE seen holding on rates for the foreseeable future and talk of further quantitative easing measures on the horizon, the pound is likely to remain under pressure against the greenback.

Today’s highly anticipated speech by Federal Reserve Chairman Ben Bernanke saw a surge in volatility with equity markets whipsawing minutes after the chairman’s address at the Jackson Hole Economic Policy Symposium. As we noted in Monday’s USD Trading Today report, it was widely expected that Bernanke would not announce any new QE measures as the Fed has seen an increase in the number of dissenters among voting members who have expressed their concern regarding the Fed’s current policy and its impact, or lack their of, on domestic growth prospects. Yet the initial reaction saw traders jettison risk across the board before equities slowly pared all the day’s losses to close higher on the session.

The UK economic docket is rather quiet next week with the only data points of note starting on Tuesday with the August GfK consumer confidence survey followed by nationwide house prices on Thursday. Consumer confidence is expected to deteriorate to its lowest read since February of 2009 with estimates calling for a print of -33, down from a previous read of -30. House price data is expected to be mixed with the year on year prices seen growing 0.4% from a previous decline of 0.4% y/y, while the month on month print is seen coming in flat after a 0.2% m/m read a month earlier.

The GBP/USD pair tested weekly lows today at the 50-day moving average at 1.6220 before paring losses to close just above the 50% Fibonacci extension taken from the November 2010 and April 2011 crests at 1.6270. Interim support rests here with a break below eyeing subsequent floors at the 61.8% Fibonacci extension at 1.6160 and the 1.61-figure. Topside targets are seen at the 1.64-handle backed by 1.6440 and the 23.6% extension at 1.6520.

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