GBP

A BULLISH Harami in the making right now in the daily charts. I like this kind of price action we surely will be moving a 100 pips to 1.5950 thats done deal.

Funny how history tends to repeat,Geoffrey Howe produced a budget in 1981 that was somewhat controversal because it focused on reducing the deficit and was against further stimulation of the ecconomy in what were seen as tough ecconomic times.A letter was sent to the Times signed by 364 economists from the world of accademia critical of his policies that many now believe are credited with rejuvenating the british ecconmoy and laid the foundations of a period of unprecedented prosperity.One of the 364 signatories was ...Mervyn King ..then I think at the time a professor at Birmingham university.My neck is still out,Mervyn King has been wrong before in similar circumstances and has a reputation for sometimes voting in the minority on the monetary policy commitee.Better ecconomic figures later in the year and chinas continued export of inflationary pressures will see him out voted again.In yesterdays figures,the increase in uk manufacturing was not bad,of course transport,construction,and retail were all down but it was hardly surprising given december weather.There was quite a lot of construction activity starting up in london before the snow,several large projects,that are now behind and racheting things up to make up for the delay during the bad weather.Personally looking for pound to establish good technical support and begin taking positions there in preparation for better GDP figures being released in the spring against a back drop of rising inflation.

Dodger, Hmmm, I tend to feel the stagflation may well persist as significant public sector job losses start to impact upon GDP. I don't see anything like enough take-up by the private sector just yet. It will take lots of time to absorb the spare labour capacity which is heading our way anytime soon. I think Mervyn King is right in thinking develeraging and deflationary environment for the foreseeable future. Its just that this is disguised by commodity prices right now but that situation can turn on a dime. I don't fall for the recent enthusiasm for US marginally improved stats and china, eur et al have their various potential time bombs ticking away.

The only justification for BOE to have a rate rise would be for their own perceived credibility. We are heading for a deep recession as is europe our largest trading partner. We aint seen nothing yet !

Going to stick my neck out here on interest rates,first todays uk GDP was no surprise given the "frozen" state of ecconomy in december due to weather,things should be much better going into spring if not before especially if the"royal wedding"is the tourism and retail stimulus some claim it will be.Second if prices of commodities follw their projections higher "especially oil and basic foods" there may be a dire need for some action on interest rates to counteract its effects by boosting pound against dollar and making imports cheaper???Stability is sometimes preferable to growth,people just got used to growth,year in ,year out,and think its going to re-appear as pre-2007,interest rates may need to go up first(not only in UK) to attract money back into western banks and out of commodities and "emerging" ecconomies,then they will be able to start lending to business and individuals with sound fundamentals.Still think BOE will make two rises this year,which they may be forced into by fundamentals beyond UK domestic considerations.