Category: The Sterling Digest

The Sterling Digest now as a weekly summation of news to consider when trading GBP pairs, in particular.

Sterling Digest, May 1 2012: the doves rally sterling
The political reason the ECB turns dovish

Everybody knew that the RBA was set out to cut interest rates. But the RBA surprised the market with a much bigger than expected cut of 50 basis points. $GBPAUD rallied hard after the announcements and remains over 100 pips above its pre-RBA levels. The ECB also delivers an announcement on interest rates this week. The ECB is also expected to be dovish as the central bank shifts its focus off the banks and on to their economies. The $EURGBP remains below 0.82. Can sterling continue its rally on dovish sentiment from other central banks?
- UK PMI Falls, Export Orders Tank Thanks To Bad Sales In Europe, Asia, And The US (Busines Insider)
- Manufacturing still growing, CBI says (The Guardian)
- It Is Official – The RBA Is Working The Australian Dollar Lower (Seeking Alpha)
- Downturn In Australia According To US Corporate Chiefs (Forex Live)
- ECB Will Eventually Opt For A Rate Cut Over LTRO (eFX News)
- Notes from the DoubleLine Lunch with Jeffrey Gundlach, Spring 2012 (The Reformed Broker)
- EURGBP Update (50’s Blog)
- GBPNZD Update (50’s Blog)
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May 1, 2012
Sterling Digest, April 29 2012: bears want in
One pound coin

After such a bullish close to the week, it seems almost natural that sellers and sterling bears start piling into the market looking for their next opportunity at these higher levels.
- Second Baby Squid Rumored To Be In The Running For Bank Of England Head (Zero Hedge)
- Speculative Investors Aggressively Betting On More Pound’s Gains (eFX News)
- We have not even made a 32.8% correction to a 470pip rally (Chart.ly)
- Charts 2012 – Week 18 (Stoic Trading)
- The Nasty Cable Trade (Capital Management)
- GBPUSD: Devious?…No, Clear as Water! (Winners Edge Trading)
- GBPUSD Weekly Chart (Wright Foreign Exchange)
- GBPUSD daily (Trading Views)
- Here is a chart of the cable’s epicness (Chart.ly)
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April 29, 2012
Sterling Digest, April 28 2012: weak sectors can’t stop sterling
UK housing market may still be weak but sterling sure isn't

$GBPUSD slaughtered bears today as it charged to new yearly highs to close the week above 1.6250. That’s a bullish statement. The nice thing about this trend is that there have been corrections along the way so it is hardly overbought. And while this rally started in the midst of UK QE3, now that the central bank has turned hawkish there may be no stopping this sterling rally. Despite what you may think about the UK economy, it is the central bank’s turn in sentiment that strengthens sterling right now. And that makes this rally for real.
- UK March Mortgage Approvals Lowest Since May 2011: BBA (Forex Live)
- Tenants being priced out to make way for Olympic lets (The Guardian)
- David Cameron accused of idiocy over austerity mantra (The Guardian)
- The Most Powerful Chart Yet In Favor Of Stimulus (Business Insider)
- I Gotcha Weak GDP Right Here (Forex Live)
- GBPUSD Keeps The Momentum Going As Buyers Remain In Control (Forex Live)
- Constancio: ECB Ready To Adjust Policy According To Situation (Forex Live)
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April 28, 2012
Sterling Digest, April 26 2012: double-dip musings
Manufacturing written on the money. It's that important.

There is so much commentary about the British economy following the release of official data that revealed the UK economy is in a double-dip recession. Traders, however, look ahead to the Bank of Japan rate announcement for whether the $GBPJPY remains supported above its major psychological level at 130.00.
- GBPUSD Update (50’s Blog)
- The MPC shouldn’t rely on the new GDP figures – and nor should you (City AM) [coming from BoE member Andrew Sentance]
- Signs of manufacturing activity picking up and firms more optimistic (CBI)
- UK economy back into recession (Al Jazeera)
- Why Is the UK Double-Dipping? (The Atlantic)
- UK Back in Recession, Did it Really Ever Leave? Disappointing Details; Five Reasons the UK Recession Will Get Much Worse (MISH’S Global Economic Trend Analysis)
- Dollar hits 3-wk lows after Fed says ready to act if needed (Reuters)
- BOJ Failure to Ease Tomorrow Would Be Disaster, Mizuno Says
  (Bloomberg)
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April 26, 2012
Sterling Digest, April 25 2012: market follows central bank not economy
UK companies are backing a new Government campaign to highlight the best of modern British manufacturing at an exhibition during the Olympic Games. Will it work?

It was the hawks versus the doves of the BoE and today the hawks won. Even with the UK falling into a double-dip recession, the BoE has already told the market that the economy is actually stronger than the number would reveal. They are ignoring today’s GDP release. And the market followed suit with new yearly highs. We noted yesterday that any sterling weakness on the back of a disappointing GDP number would be temporary. Coupled with Bernanke keeping the door open for QE, $GBPUSD bulls remain well supported above 1.60.
- Britain back in recession after shrinking 0.2% in Q1 (Hurriyet Daily News)
- UK and US GDP (YoY) figures (Chart.ly)
- Bernanke: Monetary Policy In The Right Place, For The Time Being (Forex Live)
- GBPUSD Update (50’s Blog)
- GBPJPY 4H update (Chart.ly)
- US and UK to collaborate on ‘floating’ wind turbines (Kleenergy Ecosystems)
- UK ‘could become one of world’s biggest shale gas producers’ (The Telegraph)
- This Is The UK’s Weakest Recovery In 100 Years (Business Insider) [an economic history lesson]
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April 25, 2012
Sterling Digest, April 24 2012: the moment of truth
Wednesday may be a moment of truth in this sterling rally that has taken hold since the beginning of the year. Though the Federal Reserve announces its decision on monetary policy tomorrow, sterling traders have their eyes on the UK GDP release earlier that morning. But the Bank of England has already dismissed the GDP release. The BoE gives inflation trends more weight than the economy when setting monetary policy. So on disappointing GDP expect sterling to weaken, but that move lower may only be temporary as the market discounts GDP much like the BoE already has.
- BOE Miles: Weak Economy Vindicates My Call For Further QE (Forex Live)
- Why UK GDP continues to lag the G7 (Financial Times)
- Weekly shows more interesting pattern (Chart.ly)
- Daily shows Pound is at daily resistance area (Chart.ly)
- Elliott Wave Analysis For GBPJPY on 4Hours Chart (Elliot Wave Analysis)
- GBPJPY & GBPNZD Updates (50’s Blog)
- STERLING DIGEST April 19, 2012: the euro is dying (FaithMightFX)
- Government stealth war to weaken AUD (EuromoneyFXNews)
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April 24, 2012
Sterling Digest, April 23 2012: bulls maintain control
Pounds and Pence

$EURGBP breaks to new lows to open the new trading week as fully anticipated by many in Thursday’s digest. Sterling also maintained bullish momentum versus the commodity dollars as $GBPAUD, $GBPNZD, and $GBPCAD continued to rally higher in Monday trading. $GBPUSD was the odd man as it trades in a narrow range struggling with both a strong USD and strong GBP. If USD strength remains, look for cable to correct lower to 1.60 before rallying again to new highs.
- FOMC Preview: All Eyes On Econ, FFR Projections For Outlook Change (Forex Live)
- After Game Changing Data Sterling Hits Three-Year High Versus Euro (SFO Magazine)
- How Do You Measure a Cup and Handle Target? (The FX Cafe)
- GBPUSD Update (50’s Blog)
- USD crosses (Big Trading)
- Daily Chart Art – April 23, 2012 (Baby Pips)
- GBPUSD 4H (Chart.ly)
- Retail Trader Positioning 23rd April (Pivot Farm)
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April 23, 2012
Sterling Digest, April 22 2012: double-dip risks
Large risk here of a double-dip

The Bank of England is sounding very hawkish with commentary from both Adam Posen (uber-dove) and Andrew Sentance (uber-hawk) featured today. However with double-dip calls coming out of the UK, the market is already looking ahead to Wednesday’s UK GDP release. Currently hawkish sentiment will drive an already rallying sterling higher into the release. However, the risk of a contraction could see sterling tumble severely on disappointing data.
- The United Kingdom Explained (Explore)
- Why I Changed My Vote (Peterson Institute for International Economics)
- Interest rates could start to rise soon – Andrew Sentance (The Telegraph)
- Britain to discover if it is in a double-dip recession (The Telegraph)
- Property market smothered by ‘gigantic’ rate swap costs (The Telegraph)
- Britain pledges additional £10bn towards IMF war chest (The Telegraph)
- 12 reasons why Mark Carney should stay put in Canada (The Globe and Mail)
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April 22, 2012
Sterling Digest, April 20 2012: sterling hot
Sterling so hot even old notes find value

Sterling has staged a breakout across the board this week as its underlying fundamental landscape has turned hawkish. Early Friday trading saw GBP break to new 2012 highs versus the AUD, CAD, USD, and NZD. Its been a tremendous week. So it is no wonder that many traders are looking to get short sterling into next week. Whether this is a good idea or not depends on your timeframe. Just remember though, the trend is your friend.
- GBP Making Strong Moves On The Crosses; This Is Not The Time To Be Short Of GBP (Forex Live)
- BOE’s Posen Says U.K. Economy Will Be Stronger Than Data Show (Bloomberg) [He must have known retail sales would be a blow out today.]
- Positioning More Bearishly Vs. The Australian Dollar As It Loses 2012’s Gains (Seeking Alpha)
- The Sterling could be forming a double top (Chart.ly)
- Elliott Wave Analysis For EURGBP on 4hours Chart (Elliot Wave Analysis)
- GBPUSD Update (50’s Blog)
- This most recent upswing confirmed the floor on a big rising wedge for cable (Chart.ly)
- EURGBP Weekly chart (Chart.ly)
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April 20, 2012
Sterling Digest, April 19 2012: the euro is dying
Bureaucracy kills the euro

The streams are buzzing with $EURGBP talk as the pair finally breaks out to the downside for new yearly lows. This pair remained rangebound for 4 months as the ECB, IMF, and EU kept the market in great suspense on what it was going to do about Greece and the other PIIGS. Unlike other QE-wielding central banks like the BoE and the $FED, the ECB took its time in dealing with the financial crisis within its borders. As larger economies like Spain and France start to teeter, the long term euro implications of early inaction could be devastating and sterling stands to benefit.
- Case for a Lower $EURGBP Exchange Rate (The FX Cafe)
- Weekly Breakdown – FUGLY (Chart.ly)
- EURGBP 4HR (Chart.ly)
- The ECB balance sheet is larger than the Fed’s or the BoE’s (Fulcrum Asset Management) [pdf]
- Pound powers higher, Aussie droops (Tradingfloor.com)
- BoJ will print as much as it takes (The Big Picture)
- Market Still Expecting BOJ Easing (FX Street)
- Bank of Canada lifts some forecasts, warns on debt (Reuters)
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April 19, 2012