Strategic trade
Trade view / 11 August 2016 at 13:40 GMT

BoE policy, UK economy undermine sterling

Managing Partner / Spotlight Group
United Kingdom

I am already short of GBPUSD. The position has an average opening date of July 9 at a price of 1.3163. 

Now, all time based technical measures of GBPUSD point out that sterling is a currency to be sold. This view has been established by the rate cut last week by the Bank of England and the prospect that UK rates will go lower. 

Similarly, UK Gilt yields are falling with the 2-Year Gilt threatening to trade below zero. 
Yesterday the Gilt printed a low of 0.087% and as of 12:54 GMT it is only slightly higher at 0.131%. On current behaviour, the yield decline will not be exhausted until a range of -0.22% to -0.107% is fulfilled.

As for GBPUSD, the market has turned south once again as UBS reduced its forecast for sterling on expectations that the BoE will have to embark on further easing measures in the coming months.
Source:, Spotlight Ideas

UBS forecast that GBPUSD will decline to 1.2500 although they see a floor at 1.20000 given that Mark Carney, governor of the BoE has apparently ruled out taking base rate into negative territory.

In my experience, market will always overshoot and so I am still not convinced that GBPUSD will bottom at 1.2000 and I would look for an extension to 1.1782.

GBPUSD 10-Year Chart:
Source: Spotlight Ideas
Management and risk:

Parameters: GBPUSD.

Entry: Sell 1.2977 13:15 GMT.

Targets: 1.2513 ... 1.2234 ... 12008 ... 1.1782.

Stop: 1.4000.

Time horizon:  strategic trade.

— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more
15 August
AVLion AVLion
what about gbpjpy which you have left at 129.5 sell at time of referendum? Are you still open or out from it? please please give some analysis sir as I am open in buy at 132.5 buy. cheers
15 August
Stephen Pope Stephen Pope
Dear AV... I will produce a trade comment on GBPJPY and advise when posted...Probably be dine tomorrow.
16 August
Stephen Pope Stephen Pope
Dear AV,
Please see the site for GBPJPY analysis.

16 August
AVLion AVLion
Thanks Steve....gone through your analysis and it seems abysmal degradation of this pair...any way thanks again


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