GBP Fundamentals

Here is the speech from Carney from yesterday:

Aha! Thanks for sharing this. Been trying to get my hands on the actual transcript but all I’ve found were news releases so far. What’s your take on his assessment? Do you think he’ll backpedal again when UK data starts to disappoint?

Hi PipDiddy,

No, I think they will do the rate hike. I think they delayed it enough and the only the worries me is the Independence vote. I do not have experience with that one and do not know what the effects can be if the conclusion will be to separate the countries. I think GBP is one of the better economies and it will rally again. It makes a correction because it disappointed now some people but it is still strong. What about you?

A great article about the Scotland Indepence vote and the possible outcomes:

Yeah I do agree the independence vote might have a bigger say in price action this week, but some say that the early surveys are biased and that there’s a pretty good chance Scotland will stay in the UK. In that case, we might see a very strong relief rally for GBP pairs, especially if data (CPI, retail sales, jobs) comes in strong and another 2-7 rate hike vote is seen from the BOE minutes. Got any positions open?

I have GBP/JPY short open based on a channel play daily TF setup. I will close it though soon.

Regarding what you said, it is true, I make one key difference between GBP and USD. USD is very strong and I am comfortable to have open positions before FOMC. However I am not comfortable with GBP in that sense. I do not think that in the current situation GBP can cope with negative news to turn. I will watch live the vote on Thursday and as soon I think it is decided I will jump in. I also think though that the chance is larger for a ‘No’, but we have to consider that official results might only come out on the weekend, like the article said. In this case I will be sitting at the computer at market open on Sunday night and open the positions based on the results. Gaps would be expected.

Are you trading it?

Yeah I’m in the same boat as Happy Pip with a long GBPNZD trade. Dang, that GBPJPY break to 180.00 was pretty huge! I keep wishing I picked that pair instead. I’m gonna close my open positions ahead of the weekend too since I’m also expecting gaps, although it looks like the Nays have it so far in the Scottish referendum.

An “No” has won. Yes, GBP/JPY would have been a great setup. This was the rare time when market analysts were about right how strong the GBP/USD pair can be. I have read it can shoot up to 1.6600. It was not that strong but given the volatility it was a good forecast. Now the question is how large the retracement wwillt be and if investors are confident enough with the 54%-46% win or they still worry about independence in the long-term.

Here is what Carney had to say yesterday:

Mark Carney: Putting the right ideas into practice

I still short gbp/cad to day, what do you think?

Fed and BoE warn about their possible plans of interest rates rising in 2015. US is doing pretty well these last months. UK is not doing bad but not as well. UK seems to start progressing. I don’t understand the interest rate rise as it will slow their economy again slowing exports. They don’t have enough inflation yet to explain the interest rate hike, unless they foresee inflation rising in short. Meanwhile ECB seems to be decided to continue with their QE plans.

If everything above is correct my long term plans are to short EUR/USD and EUR/GBP. What do you think?

The GBP was making great gains based on the interest rate hike expectations. Times change and Mr. Carney gave some information on UK outlook:

Mark Carney: Breaking the tragedy of the horizon - climate change and financial stability

Another event where Mr. Carney talked, so this might get your interest:

Mark Carney: Closing remarks to the Open Forum