USD-GBP exchange rate

[mawilson 2,133]

I should probably explain my Bernanke comment...

Bernanke and other US policymakers are essentially engineering a weaker dollar

as part of the overall plan to fight deflation.

How are they doing it? The answer is "QE" - the Federal Reserve's quantitative

easing program.

QE is basically 1) printing money and 2) using the money to buy a wide range of

assets, in an attempt to boost the economy.

QE is a bad idea because

- printing money (as opposed to borrowing it) inevitably weakens the currency

- there's no orderly exit plan from QE that would foster price stability

Another 15-20 percent drop in the dollar alone could force the price of oil back to

the $85-$95 a barrel range. Other raw materials would react accordingly.

Dollar weakness would create massive inflation before the Fed is ready to deal

with it.

Other troubling signs:

- reports earlier this week that trade between Brazil and China might soon be

transacted in real and renminbi - not in USD

- US stocks, bonds and the dollar all fell simultaneously - a very bearish sign for

the currency

The day of reckoning is near.

The US went into the financial crisis with a worse debt to GDP ratio than the UK -

63 percent against 44 percent - and many analysts expect the US ratio to hit 100

percent before the UK.

US government policies have ruined this country. I don't see anything good on the

horizon for the dollar or the economy.

Edited May 22, 2009 by mawilson

[rebeccajo 14]

Jaysus, Mark.

The day of reckoning is near?

Were there Jehovah's Witnesses at your door this afternoon?

[mawilson 2,133]

Jaysus, Mark.

The day of reckoning is near?

Were there Jehovah's Witnesses at your door this afternoon?

We're going to hell in a handbasket, Becca. It's a damn shame.

[wexford65 0]

Just spotted this thread and thought I would have my 0.02.

I actually am an FX trader so this is what I do on a daily basis. The GBP has not had a fun time over the past year but all things are relative and so compared to the USD it has faired pretty well. I saw the earlier comments about if it breached 1.365 all bets were off. Well it did in fact breach, down to 1.35 and yet miraculously here we are at 1.64. The USD is in trouble and most major FX pairings should strengthen against it.

Unless you have a decent sum I wouldn't be looking to pick a top or bottom in ANY currency. Picking bottoms is best left to the monkeys.

I think we will see 1.74 in the next 3 months but all it would take is for a horrible piece of UK data to come out and we could be back in the 1.50s. Volatile times ahead.

Here is a simple chart I have thrown up to illustrate why we are pausing here. Many retail traders use Euclid retracement numbers (often incorrectly called Fibonacci). These indicate the percentage the chart has retraced from its prior high/low. In this case you can see it is struggling to get through the 38.2% line. If we make it up out of this area of congestion expect to see 1.73-1.74

http://www.xoods.com/charts/GBPUSD-25.png

Good luck,

Paul

[paulinespens 3]

Just spotted this thread and thought I would have my 0.02.

I actually am an FX trader so this is what I do on a daily basis. The GBP has not had a fun time over the past year but all things are relative and so compared to the USD it has faired pretty well. I saw the earlier comments about if it breached 1.365 all bets were off. Well it did in fact breach, down to 1.35 and yet miraculously here we are at 1.64. The USD is in trouble and most major FX pairings should strengthen against it.

Unless you have a decent sum I wouldn't be looking to pick a top or bottom in ANY currency. Picking bottoms is best left to the monkeys.

I think we will see 1.74 in the next 3 months but all it would take is for a horrible piece of UK data to come out and we could be back in the 1.50s. Volatile times ahead.

Here is a simple chart I have thrown up to illustrate why we are pausing here. Many retail traders use Euclid retracement numbers (often incorrectly called Fibonacci). These indicate the percentage the chart has retraced from its prior high/low. In this case you can see it is struggling to get through the 38.2% line. If we make it up out of this area of congestion expect to see 1.73-1.74

http://www.xoods.com/charts/GBPUSD-25.png

Good luck,

Paul

Is the pound in a worse state like it was in 1994/95 when left the ERM and it was 7 French Francs to the pound?

[wexford65 0]

I will assume that is a rhetorical question...

[mawilson 2,133]

I think we will see 1.74 in the next 3 months but all it would take is for a horrible piece of UK data to come out and we could be back in the 1.50s. Volatile times ahead.

Why do you think that?

I see it going sideways for a while... between 1.60 and 1.65.

At $1.70, GBP is overpriced and there's no good reason for it to be.

[mawilson 2,133]

Anyway, my currency play du jour is long USD/JPY. The yen will not remain this strong for much longer;

their exports are plummeting and their central bank will intervene at some point.

[wexford65 0]

mawilson, you seem to enjoy a dabble yourself.

I wont bore people by bringing technical analysis into the chat room but I am a trader that trades technicals, not fundeamentals.

That is my reasoning for the move to the 1.70s

[mawilson 2,133]

mawilson, you seem to enjoy a dabble yourself.

I wont bore people by bringing technical analysis into the chat room but I am a trader that trades technicals, not fundeamentals.

That is my reasoning for the move to the 1.70s

Fair enough.

[annelizabeth 1]

Good people and currency experts. I want to transfer some money back to the UK - about $8000. What's the best way to do it? I only ever transferred it the other way before.

[mawilson 2,133]

Good people and currency experts. I want to transfer some money back to the UK - about $8000. What's the best way to do it? I only ever transferred it the other way before.

Use a US debit card and withdraw the money from a UK ATM?

[mawilson 2,133]

mawilson, you seem to enjoy a dabble yourself.

I wont bore people by bringing technical analysis into the chat room but I am a trader that trades technicals, not fundeamentals.

That is my reasoning for the move to the 1.70s

Don't want to go into details, but I have reasons to believe sterling will move back

to around $1.50 in the next year or two - well below its PPP (purchasing power parity) level.

[Usui Takumi 1,562]

Please go into some level of detail.

[mawilson 2,133]

"Sterling is joined at the hip with the dollar in being in the global doghouse at the moment."

--Jim Wood-Smith, head of research at Williams De Broë