US ($) Currency Thread 1 (closed - use thread 2)

inspector_monkfish

trading at 1.4250

photome

inspector_monkfish wrote: »

errm, he not scottish?? he has more than 1 eye ??

You are not jeremy clarkson in disguise are you? oh no you didnt call him an idiot! :beer:

inspector_monkfish

photome wrote: »

You are not jeremy clarkson in disguise are you? oh no you didnt call him an idiot! :beer:

haha, thought i'd give him a chance to prove himself first.....

inspector_monkfish

16:46 12Feb09 IFR-GBP/USD: Cable Continuing Retrace, But Mostly on USD Strength

Boston, February 12th.
The retracement of the recent cable rally has continued today. Admittedly, however, the vast majority of the selling came about early in the European sessions when a bunch of sell stops got tripped on the market"s way to the sup-1.4150 lows. A view that the BoE could be moving to quantitative easing (a la the Fed) is being blamed in some quarters for the drop, but that really doesn"t float very well at this point. Another rate cut is expected by the MPC in the March meeting. That"s really an old news story.

Consider that EUR/GBP actually weakened at the same time as GBP/USD and we can see the drop was more a function of USD strength than sterling weakness. The fact that China says it"s going to continue buying Treasury debt is a USD positive, and the general global weakness in stocks helps with the flight to safety trade.

At this point, we view recent price action in cable as mostly technical,
though. The market had clearly overdone the rally off the January lows, and now is almost exactly on the 50% retracment level.

photome

Caligirl wrote: »

Thanks, yes I'm hoping the fact that the US are doing it will mean we will be on a par with them.

I just wish Obama was our PM - instead of Gormless Brown.

Fingers crossed for your 1.55 predictions - I will be in the States for a month from next week.

Clarkson for PM :beer:

inspector_monkfish

Gbp/Usd almost at 1.4400 on renewed buying

05:17 GMT - Stops brought the [GBP/USD] to an initial intraday high of 1.4355 before light selling brought it back down towards the 1.4325 level. However, another round of buying from a UK Clearer and a US Prime saw the pair surmounting its earlier high to reach a fresh intraday high of 1.4395 filling selling orders at the 1.4380 level before easing a tad to current
level of 1.4375.

Gbp/Jpy buying by model funds, Japanese margin accounts and a major name to an intraday high around 131.25 also gave a huge prop to the GBP/USD. Fresh bids now at 1.4320 with more at 1.4290 now seen protecting the downside with offers far away at 1.4460 providing some resistance.

- - - - - - - - - -

currently trading at 1.4375

inspector_monkfish

currently rallying up to 1.4440

inspector_monkfish

Found this interesting article.....

- - - - - - - - - - -

(GBP) Would a QE environment be bad for GBP?

(GBP) Judging by BoE governor King's unprecedented decision to more or less
pre-announce the MPC's future monetary policy plan well in advance of the next meeting, i.e. further monetary easing and a likely move to formal quantitative easing (QE) to expand money supply, it seems this is a tacit admission of grave concerns that the UK transmission mechanism is more than impaired, with the economy arguably not too far away from a liquidity trap situation. But the impact on GBP of formal QE implementation in theory has to be negative in the first instance. However as there emerge signs that QE is working and having the desired effect, the currency should recover on a sustained basis, the more so if the ECB does not adopt QE.

The BoE is unlikely to want to take the Bank Rate all the way down to zero, for technical reasons, and so as not to completely wreck the monetary transmission mechanism. Indeed in its Feb Inflation Report BoE suggests that if the Bank Rate falls far enough to push average deposit rates to zero, any further reduction in lending rates could lead to a narrowing of the spread that banks maintain between deposit rates and lending rates to cover the cost of providing banking services, plus a profit margin. The BoE argues that a combination of lower spreads and lower pass-through of interest rate cuts is eroding the strength of the monetary policy multiplier, since lower spreads would reduce banks' earnings and could possibly erode their capital, thereby impairing their ability to lend.

The UK is not in liquidity trap situation in the strict sense yet, but it's
moving in that direction, and the BoE is probably wary of such an eventuality. Since the UK is not actually in a deflationary situation, although there are risks, the BoE is unlikely to take the Bank Rate all the way down to zero, although it could take it close. After all, expanding the monetary base itself through QE, via the beefing up of the level of banks' reserves balances at the BoE (as it purchases private & public sector assets), would place downward pressure on nominal interest rates anyway (already the GBP o/n rate has been trading at 0.75% on the bid side for a few days now). So even though we are likely to see a 0.5% Bank Rate in Mar, there is little to suggest that it won't go further down beyond that to a 0.25% floor, later.

Ceteris paribus, in theory the outcome of a move to formal QE should be a
m/t depreciation of GBP TWI initially, as this is to be expected from an
expansion of the money supply. However much would depend on how soon the ECB in particular moves to formally adopt QE as a monetary policy instrument. If the ECB implements QE soon, then any m/t downside on GBP will likely be short-lived. However if it implements much later (or not at all), GBP could stay vulnerable, initially. But further out, if the markets take the view that BoE policy stimulus is bearing fruit, we should expect to see EURGBP head much lower, especially if the ECB is viewed as lagging very much behind the curve, and jeopardising any recovery of the Eurozone from recession. The impact on GBP vs USD from QE in the UK should be limited though since the US Fed is already implementing credit easing, and could even adopt a more formal QE in due course.

And if GBP should depreciate as a consequence of QE, the BoE would probably not be too perturbed by such a development, since it would a) assist in then rebalancing of UK growth away from domestic consumption and more towards net exports and investment over the l/t and, b) help to lift the CPI projection at the 2yr horizon to above the sub-1% rate currently forecast by the BoE.

inspector_monkfish

interesting article in the Daily Telegraph today....

http://www.telegraph.co.uk/finance/economics/4603903/European-finance-ministers-to-attack-Alistair-Darling-over-sterlings-slide.html

inspector_monkfish

trading at 1.4470