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Sterling Digest, May 14 2012: safety trumps economics

Money makes the world go round
Investors want pounds

It appears that Friday’s theme was mere profit-taking as good news out of Canada and US was excuse enough to move some money off the table. Sterling is back on trend today with comm dolls leading the way. $GBPAUD, $GBPNZD and $GBPCAD have all broken out above their Friday highs in opening market action. While fundamentals point toward a deteriorating UK economic picture, risk flows dominate with GBP enjoys European safe haven status.

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Sterling Digest, May 11 2012: the cracks appear

Franco-German Summit at the Austerity Euro Cafe
Hollande may not be any different for the euro

Sterling ends the week weak across the board. Profit-taking was the theme this Friday trading session as investors banked pips on a strong bull trend in sterling that has been raging for weeks. As we head into the weekend, the question that traders start to ask is: did we witness a correction this week or the beginning of a reversal as the market comes to grips with a very weak UK economy relative to others in the G10 such as Canada, Australia, and the US. Watch the major psychological level at 1.6000 in $GBPUSD, $GBPAUD, and $GBPCAD for answers into the new trading week ahead.

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Exit The Euro

Chart: the deleveraging process is desynchronized and heterogeneous

It has to be a very scary thing when your banks, companies, households and even governments can’t pay down its debt. Can a currency be made worthless based on its debt load in a world where money is electronic and can be minted with a push of a button? We just may soon find out. Exit the euro.

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Sterling Digest, May 10 2012: NO QE4

The Beautiful British Pound Sterling
Beautiful trend in sterling continues on

The euro sank this week as the Eurozone became unhinged in political elections that ousted leaders who led the charge for austerity. $GBPUSD followed in sympathy but today’s BoE decision to hold off on another round of quantitative easing (QE4) has lifted sterling across the board. As with any strong trend, the contrarians are circling. Many bears are out looking to short sterling especially in $EURGBP and $GBPUSD. But this bull trend in sterling is not one to step in front of. Don’t fight the flows!

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Sterling Digest, May 4 2012: NFP preview

JOB Toulouse
Jobs remain important catalyst for markets

The spotlight event of the month for the forex markets is today’s US NFP release. As USD sentiment seems to have shifted to fundamental flows rather than risk flows, a disappointing number could weaken the USD. $GBPUSD has found support at 1.6160 all week. US NFP should be a catalyst for further correction or a continuation of the bullish trend.

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Sterling Digest, May 2 2012: European dealings

collage of the economist covers featuring the euro
Euro woes benefit sterling

$EURGBP has broken to new yearly lows in today’s trading as sterling continues to gain against the euro. UK economic data continues to come in mixed but, despite the consensus, PMI numbers above 50 suggests the economy has signs of strength.

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Sterling Digest, May 1 2012: the doves rally sterling

The rather dangerous, The Economist cover
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?

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Sterling Digest, April 29 2012: bears want in

One pound coin
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.

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Sterling Digest, April 28 2012: weak sectors can’t stop sterling

House and UK Pounds
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.

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Sterling Digest, April 26 2012: double-dip musings

UK : 20 Pounds : Reverse
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.

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