Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Qualcom Stock Market Harbinger - 12th Aug 22
Apple Exec Gets World's 1st iPhone 14 for Daughters 14th Birthday Surprise Present Unboxing! - 12th Aug 22
Steps to remember while playing live roulette online - 12th Aug 22
China Bank Run Protests - Another Potential Tiananmen Square Massacre? - 11th Aug 22
Silver Coin Premiums – Another Collapse? - 11th Aug 22
Gold-to-Silver Ratio Heading Lower – Setup Like 1989-03 - 11th Aug 22
Severe Stocks Bear Market: Will You Be Among the Prepared 1.5%? - 11th Aug 22
There's a Hole in My Bucket Dear Liza, UK Summer Heatwave Plants Watering Problem Song - 11th Aug 22
Why PEAK INFLATION is a RED HERRING! Prepare for a Decade Long Cost of Living Crisis - 9th Aug 22
FREETRADE Want to LEND My Shares to Short Sellers! - 8th Aug 22
Stock Market Unclosed Gap - 8th Aug 22
The End Game for Silver Shenanigans... - 8th Aug 22er
WARNING Corsair MP600 NVME2 M2 SSD Are Prone to Failure Can Prevent Systems From Booting - 8th Aug 22
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

British Pound Soars above GBP 1.71, Tracking £/$1.80 Forecast Despite Scottish Independence Risks

Currencies / British Pound Jun 20, 2014 - 08:39 PM GMT

By: Nadeem_Walayat

Currencies

The british pound soared above GBP 1.71 and as of writing is holding steady at around 1.705. The surge in sterling confounded many market analysts who had both been skeptical of the strength of the british economy as it continues to face head winds from a depressed Euro-zone and the chaos inducing risks that surround the forthcoming Scottish Independence referendum where the polls continue to trend in the direction of the Yes vote.


CNBC illustrates the prevailing bearishness just at the time sterling started to take off.

CNBC - 5th June - Sterling faces pressure as BoE holds rates

The Bank of England (BoE) left interest rates and its asset purchase target unchanged on Thursday, amid expectations from some analysts that sterling could be set for a fall.

As expected, the bank decided to hold off on adding to the £375 billion ($628 billion) of asset purchases it has unleashed over previous years and kept its main benchmark rate at a record low of 0.5 percent. Sterling remained relatively unchanged after initially rallying after better-than-expected house price data during the morning session. David Bloom, HSBC's global head of foreign exchange strategy, believes that many strategists are "completely wrong" in believing the currency could push higher from these levels.

An appreciation of the British pound appeared to stall in May and the currency likely to trend lower in the near term, according to some strategists. Bloom added that the current account deficit in the U.K. and the lack of earnings growth meant he was bearish on the currency.

Following sterling's strength the mainstream financial press was sent scrambling to look in their rear view mirrors for answers that coalesced around expectations for an much earlier BOE rate hike.

Wall Street Journal - The British pound traded at its highest level against the dollar since 2008 after Bank of England officials suggested over the past week that the timeline for raising U.K. interest rates could be shortened.

Bloomberg - The pound advanced to the strongest level in 5 1/2 years against the dollar this week as bets the Bank of England is moving closer to increasing its benchmark interest rate fueled demand for the U.K. currency.

British Pound Forecast 2014

My long standing forecast as of mid Feb is for the British Pound to target a strong trend higher to a target of £/$1.80 by year end REGARDLESS of the outcome of the Scottish Independence referendum as illustrated by the excerpt below -

14 Feb 2014 - British Pound GBP Trend Forecast 2014

A quick look at the long-term GBP chart clearly shows a market that is breaking out of a multi-year trading range of between GBP 1.63 and 1.49. Therefore despite the Scottish Independence vote looking set to introduce much volatility during 2014, the over riding strength is such that GBP breaking above £/$1.80 before the end of 2014 appears highly probable.

Therefore sterling traders and investors need to immunise themselves against the bearish rhetoric that they will be subject to during 2014 in the run up to the Scottish Referendum, its aftermath and then the frenzy surrounding the General Election, all of which will be taken as cues for a weaker sterling when instead the reality will be one of sterling grinding its way ever higher to at least £/$ 1.80 this year as it continues to discount a strong UK economy and and outright Conservative election victory in May 2015 as illustrated below -

In terms of the British Pound forecast for the Scottish Referendum, it implies that -

1. A Scots No vote will dissipate Independence / UK breakup uncertainty for several decades.

2. A Scots Yes vote will result in an Independent Scotland having far LESS influence over Sterling than Scotland has today.

Both of these outcomes will tend to reinforce Sterling in terms of discounting a long-term trend for a more robust sterling economy.

Source and comments: http://www.marketoracle.co.uk/Article46142.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2014 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in