Pound Sterling has been in the news lately. And the news coming out of UK have been abysmal. I mean it. Figures reported in August showed house prices fell at their fastest pace since 1991, while retail sales plunged to their lowest level in 25 years. These are pretty bad numbers by anyone’s standards and they culminated in news that economic growth ground to a halt in the second quarter. In fact, all that caused the biggest monthly decline since October 1992. That’s really something. Remember what happened then? Great Britain left European Exchange Rate Mechanism which resulted in a huge Pound sell off. That is when George Soros “broke” the Bank of England and reportedly made $ 1B in one day, something that is stilled widely discussed in all financial circles. GBP-USD fell 8.6% in October 1992. For comparison purposes, August saw a tumble of 8.2 %. It is rather significant.
I receive all kinds of newsletters and Forex predictions and virtually nobody predicted this severe plunge. Now, however, seems like everybody is screaming for 1.7000 level to come very soon.
Personally I don’t think it will happen just like that. Even if the price collapses to 1.7000 , chances are we are going to see a significant rally, to maybe as high as 1.9200 first. Of course I’m looking at weekly charts, so none of this will happen tomorrow, but for now I’ll be on a lookout for signs of reversal on daily and 4H charts. There might be some good buying opportunities soon.
Mike K.
I wonder how much the value of the British Isles has fallen since their refusal to join the Euro.. due to a “holier than thou” attitude so typically of this nation. If my memory serves me well, the Euro would have cost the British barely 50 pence when they turned down the invitation.. now it seems it will soon cost them a pound. Politics have halved the country’s worth!
Interesting view. Just a year ago, though, I talked to some money managers about Pound’s future. Everybody thought this is going to be “currency of the decade”. They were saying 2.5000 for GBP-USD before 2010, and maybe as high as 3.0000 before 2015. I think the success of Euro surprised everybody to some degree, especially after the slow start.