Sterling Inflection Point?

by Ashraf Laidi
Oct 21, 2010 14:20 | 46 Comments

Sterling Inflection Point? - Sterlinginflctionoct21 (Chart 1)

Sterling may have already reached its own inflection point earlier this month when the UK Treasury signalled delaying some of its election manifesto spending cuts. The deafening silence from the credit agencies regarding the latest spending review should end soon. While credit agencies focus on deficits, the BoE and currency traders also focus on the growth aspect. While QE2 has already dominated market circles in the UK, "double-dip" may soon follow if the former does not materialize soon enough. The argument that 3.1% annual CPI is an obstacle to further easing is weakened by the historical fact that BoE CPI has frequently been behind the curve. Betting against GBPUSD has not always been sensible especially at a time of inevitable QE2 by the Fed.

But IT SEEMS THE MARKET IS IN THE PROCESS of punishing GBP via BoE QE as was already done to USD via Fed QE2. GBPUSD is dragged by the fiscal validation of BoE QE2. The $1.6 double top in GBPUSD suggests $1.5650 may be retested, a break of which would extend losses towards $1.5350. 4-HOUR, DAILY & WEEKLY stochastics are all pointing down. Shorts protection can start off at $1.5870, with $1.6 acting as a major resistance. And dont forget that gravestone doji on October 15 in cable.

 

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Comments (Showing latest 10 of 46) View All Comments
redstone
bristol, UK
Posted Anonymously
14 years ago
Oct 31, 2010 9:24
Everything depends on the elections and the fed next week sid. your asking the million dollar question jus like everubody else !
sydneyjames
Sydney, Australia
Posts: 348
14 years ago
Oct 31, 2010 7:34
would close above 1.60 have any siginficance on the pound dollar? or it is just a fake out? i shorted at around 1.5877. Please comment on that.
Cheers
euxenio
barcelona, Spain
Posts: 3
14 years ago
Oct 29, 2010 20:10
la resistencia de la libra en 1,60 la ha pulverizado a donde se puede ir? me han roto los esquemas
said
mulhouse, France
Posts: 2822
14 years ago
Oct 29, 2010 14:22
if interested try saxo
said
mulhouse, France
Posts: 2822
14 years ago
Oct 29, 2010 14:21
great potential on turkish lira
but spread on cmc is high
subway90
Korea Sout
Posted Anonymously
14 years ago
Oct 29, 2010 13:55
1.6000/6020 would provide strong resistance...

expecting more sideways trading..... dip to 5550/5600 likely b4 next leg up to 6400/6500 level...
redstone
bristol, UK
Posted Anonymously
14 years ago
Oct 29, 2010 13:34
said whats GBP/TRY ?
said
mulhouse, France
Posts: 2822
14 years ago
Oct 29, 2010 13:20
i dont like giving bad advice
but gbptry might push it to 2.45 over the next three four months before having the target of 2.
aymankhlifat
amman, Jordan
Posts: 21
14 years ago
Oct 28, 2010 22:05
cable will close above 1.6050 on Friday guys so , happy weekend :-)
said
mulhouse, France
Posts: 2822
14 years ago
Oct 28, 2010 20:40
sterling resistance at 1.60