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by Ashraf Laidi
Posted: Feb 22, 2010 5:00
Comments: 3054
Posted: Feb 22, 2010 5:00
Comments: 3054
Forum Topic:
GBP
Discuss GBP
take ur long position with 1.62360 stop loss.
bien sur ruquier des injections de vitamines. on verra ca bientot.
http://bit.ly/hhuw3b
Ashraf
*** WHAT vs HOW ****
While the what is evident; BoE to predict one-off jump in CPI, the how remains unclear. How will BoEs projected slowdown in inflation from 4-5% back to below 2% take place? Will this occur via rate hikes (which are priced in by the market but not officially by the BoE) or will it materialize via the ongoing slack in the economy and austerity policies? And when we remind that the 12% increase in sterling trade weighted since Jan 2009 should dampen the BoEs repeated claims of FX-driven inflation effects--which were mainly a case of the 2007-2009 weaknessthe case for import inflation becomes mute. Figuring out the how to weakening inflation is crucial for FX & bond markets relying on the growth and yield differential play.
Yields on both 10 and 2 year gilts are down 5 bps, while the spread between UK & US 2-year yields has weakened (UK minus US) to 0.65%--the lowest in 3 weeks. Sterling eyes more downside against the USD, but is looking the other way against EUR. GBPUSD suffered from a case of lower highs after failing to break above the Feb 7 high of $1.6180. EURGBP bounced off the 0.8360 trendline support but rebound seen capped at 0.8480-00 before the ultimate retreat back to 0.8100 as seen in the chart below.
Ashraf
i let u buy some time on the fundamentals.
The global machro picture has many downside risks ! Makes it almost futile to attempt to predict anything. Muddle Through is all that anyone can do.
tell me more pls.
If we have union power growing and forcing wage increases the MPC will have to step in with rate increases. That is the main wild card imho for the next 2 years. We still have the crazy situation where the middle classes in UK do not fully appreciate the enormous size of our public debt and fiscal deficits. Nor do they understand how the bond markets could so easily take control with any loss of confidence in our ability to balance the economy and reduce debt. This is where our weakness lies, public ignorance. We have a large % of very ignorant population :-)))
The path for recovery which our new coalition government have commited is going to be extremely precarious for any GDP growth even without any anarchy and labour strikes. My opinion is they had no choice than to implement the severe austerity program. They only had very bad choices, no good choices.