Archived IMT (2008.11.06)

GBPUSD extends its tumble after earlier whispaw, breaching below $1.57 to $1.5660, in line with my early morning analysis. As I mentioned in today's article, GBPUSD has more downside to as low as $1.53, facing a lose-lose situation into tomorrow's US jobs report. An ugly report (payrolls decline of more than 300K) will further punish risk appetite including high yileding currencies such as GBP, while a better than expected report could also weigh on the currency. Today's 150-bp rate cut is a historic move by all absolute measures, and the currency repercussions are similarly tremendous. Cable's low for the year could bottom at $1.50, but the $1.45 target may not emerge until the next round of equity market turbulence, foreseen in mid Q1 2009.