Well, this is not a surprise but the speed of the move today (as ever with stg) is a bit of an eye opener - never have enough on at times like this. Last velocity like this was in 2006 to the upside. Today's economic figures over here in London are appalling but the evidence has been all about us in the shops and property market for many months... I reckon we'll chop about here, drift, and then settle into a 1.85/1.80 range for months. Does anybody think we'll see lower levels?
Hans Guenter Redeker global head of currency strategy at BNP Paribas thinks we will, and he's been fairly accurate in his analysis before. This is from Monday 11th, when Cable was at 1.9220, it's dropped 600 pips since then! Apologies for the poor video quality but the sound is ok... (ps whereabouts in London, Greenwich here ) ~ <object width="425" height="350"> <param name="movie" value="http://www.youtube.com/v/BbSi8oHQlZ0"> </param> <embed src="http://www.youtube.com/v/BbSi8oHQlZ0" type="application/x-shockwave-flash" width="425" height="350"> </embed> </object>
Top banana reference - he was spot on marking the speed of the break! V bearish... Thanks for sharing that one, cabletrader+ spend a lot of time wandering aimlessly in Brockwell Park SW2
Short-term it's been a big move so who knows what next, maybe it bounces 6 points maybe it falls to 1.80 next week. Longer-term I could easily see sterling fall another 30 or 40 big figures. I live in the UK too and I've jettisoned/hedged all my pounds early this year. With hindsight I should have shorted even more but then last month could have been painful as it rallied 8 handles. The problem with sterling is it was (until v recently) trading at levels it was at when everything was great - high interest rates, a robust economy, fairly sound public finances, strong housing market etc. Now ALL of those have gone, yet sterling is only down 10-15% from the peak. It had a decade long bull market, there is lots more downside IMO. The Uk is also very exposed to trade and the financial & housing sectors, all of which are looking very bearish right now. The only surprise with this move IMO is that it didn't happen earlier, and that it has not gone further.