Hi, I wuold like to ask if anybody is able to provide a really good and clear causation/effect explanation of why a positive GDP development is generally deemed to lead to a strenghening of a specific currency, all else being equal.
On the calendar, you see this about GBP numbers:
Measures Change in the inflation-adjusted value of all goods and services produced by the economy; Usual Effect Actual > Forecast = Good for currency;
So, probably it should go something like this "Since country x is now producing more goods and services, the combined value of the assets of country X is now higher. This means that (.....)"
I would like to understand the direct link (or the most direct link that can be pointed out, at least, between higher (than expected) GDP numbers, and the value of the currency.
Maybe it's quite basic, but I can't see it right now!
(I am trying to get better at fundamental analysis, I think I have a decent understanding of monetary and fiscal policy, and also trade balance etc. ah - maybe this is the explanaton: if a country produces more goods and services, it will export more, which will lead to an increased demand for its currency, all else being equal - am I on the right track?)
On the calendar, you see this about GBP numbers:
Measures Change in the inflation-adjusted value of all goods and services produced by the economy; Usual Effect Actual > Forecast = Good for currency;
So, probably it should go something like this "Since country x is now producing more goods and services, the combined value of the assets of country X is now higher. This means that (.....)"
I would like to understand the direct link (or the most direct link that can be pointed out, at least, between higher (than expected) GDP numbers, and the value of the currency.
Maybe it's quite basic, but I can't see it right now!
(I am trying to get better at fundamental analysis, I think I have a decent understanding of monetary and fiscal policy, and also trade balance etc. ah - maybe this is the explanaton: if a country produces more goods and services, it will export more, which will lead to an increased demand for its currency, all else being equal - am I on the right track?)