I have no secret, it comes with trading Cable for years, that asset class has made and lost me a few grand, so it is baby. I know when it wants to fly. In truth it may fall short with all the event risk hanging about, it may just go straight down. However, shorts from last year are likely to start to cover ahead, hence the excessive 3 month volatility. To date the 3 month volatility is higher than the 12 month, typical when people start unloading. If the unloading stops, then we go straight down, I would never have bought it anyway, the opportunity for me is at lower prices.
I think most speculators know that the UK populace have a habit of talking tough before the big moment. In the end I think no cigar, a last minute deal gets worked out. The Germans like to take things to the wire.
In truth I think if shorts are covering they are concerned that there is no dice ahead or at least the risk is too high to stay short. If the profit taking becomes really aggressive I suspect that we stay in the EU. In the end it is just a referendum and I can’t see Cameron wanting to be the man who destroyed the EU. So this will drag into the next parliament as no doubt the lawyers will show up to state the legal case.
So either way I think this is a distraction from the real facts, that the FED has a higher yielding currency and the UK is looking dangerously close to experiencing stagnation with the lack of inflation. The Governors letter to the chancellor clearly stated that they don’t expect inflation to recover till 2017. Oil has started a recovery at this point but I suspect we will see $35 again enough to chuck Sterling over the edge alongside the FTSE.
I know it is a lot to hope for but there are just too many head winds to see a Sterling recovering anytime soon.
The GBPUSD keeps making lower highs on the daily chart and if the next low is lower than the previous, then the pair may continue with a bearish trend.
