Sterling Hits 7-Year Low Against The US Dollar

Once again UK officials managed to put the skids under Sterling. The Pound smashed the 7-year low against the Dollar and hit an all-time low against the Yen.

I’ve said before that, even if they deny it, it suits the UK’s men in charge to have a lower currency. The usual depreciation downside, higher inflation, isn’t the number one worry, but a lower exchange rate to help what’s left of its export sector would do nicely thank you.

And what better way to give a green light to the forex market than to combine a multi-billion giveaway with a request for the banks to say just how much mess they’re really in? So on the day that Royal Bank of Scotland (RBS) hinted that it had lost more than any UK company in history, the Prime Minister admits that he hasn’t a clue just how bad things are!!! Interesting to note that 93% of the open positions on the paddypowertraders Home page are long GBP/USD. After a 600-pip drop from 5 0′clock yesterday, that could be a canny move.

On the trading front I’m still short of FTSE (^FTSE) and Lloyds (LLOY.L), but yesterday’s short bet on EURUSD was stopped out at $1.3156 (boy does that look a long way off now!).

This morning I added a £2 short bet on HSBC (HSBA.L) at 508.49. The price had been holding up well, relative to the other banks, and this morning provided a golden opportunity to short the opening rally. Doing the school walk meant that I missed the best prices, but I’m happy enough with the position.

But the real earner was another short bet in GBP/USD. I thought I’d missed the boat as the rate was already 200-pips lower by 7 o’clock, but once the break below $1.42 was confirmed I sold £5 at $1.4181. As usual I closed out part of the trade for an early profit, buying £3 at $1.4156, but resisted the urge to deal again until the break below $1.40. I reckoned that area might put up some resistance so bought back £1 at $1.3996 and trailed my stop down to $1.4021 where I was hit later on. But that’s OK; the trade put £400 plus in my back pocket, leaving me with just my short equity bets to manage this afternoon.

Hey! Check out the Lloyds price. Does some-one know something there? It’s just gone 38p bid. HSBC is holding up well at 496p-perhaps benefiting from switch activity. I’ve just closed out some of my Lloyds short at 40p and sold some more HSBC at 490p. And I’ve just closed out my FTSE short at 4115 in case there is an Obama rally this afternoon. There shouldn’t be as that’s far too predictable, but you can never tell with the Americans. If we get a decent rally I’ll be looking to put my short back on again.

Don’t forget this afternoon’s Obamarama competition; if you haven’t entered yet, we’re looking for where you reckon the Dow (^DJI) will be when Obama finishes his inauguration speech. Nearest the bull wins our last copy of Harriman’s Money Miscellany.

Enjoy the speech, and happy trading.

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