British Pound Collapses

Once again the message from the top is “Sell Sterling”. Forget all the overseas debt, Gordon Brown wants us to keep selling the Pound. This morning traders obliged, ripping 450 pips of the GBP/USD rate.

The fate of Sterling is treading a very familiar path; everytime it puts in a good week, appreciating against the other majors, some ‘grey suit’ is wheeled out to suggest that if traders want to sell the Pound they won’t find any official opposition. Normally, if you were asked to choose between George Soros and Gordon Brown on matters of investment it would be a no-brainer; one made a fortune betting against the UK government, the other has less idea about trading gold than me.

But for today the easy option has been to take Brown’s hint and sell the Pound. I’ve sold it twice today; the first time I sold a fiver at $1.4326 and was too quick in moving my stop down, limiting my gains to £50. I was due out on the school walk, followed by a quick gym session, and after last week’s moves didn’t fancy being caught out if the mood changed.

My second attempt, selling at $1.4311 with a wider stop, produced some decent gains. As usual I part closed to lock in some early gains, buying back £2 at $1.4273. I bought another £1 back at $1.4197 and I’ve just closed out another £1 at $1.4109, leaving a £1 bet running with a protective stop at $1.4155. That will guarantee an overall profit of over £500. Lovely jubley.

I closed out a small short bet on EUR/GBP pretty sharpish for some beer money. My short-term indicators gave the go-ahead to sell the Euro, but very quick profits were all that were available. Once again I was grateful to my discipline closing out at £0.8944, compared to the current price of £0.9040.

The EUR/GBP sell-off looks to have ground to a (temporary) halt at previous support around the £0.8840 level. This was the 61.8% Fibonacci retracement of the strong November to December rise. I still don’t like the Euro and I’m looking for levels to open some new shorts, but it’s a matter of patience grasshopper.

Last week I was banging on about the importance in US folklore of whether the S&P 500 (^GSPC) ends January in positive or negative territory (Bad Bank Gives Shares A Boost). Not only did the S&P end the month down, but the 8% fall made it the worst January on record! Where now? This morning the pre-market has been teetering either side of 812, but I guess the key level to watch out for is a test of 800. That held firm during January’s woes, but must be in imminent danger. Both the 14-day and 21-day moving averages are giving the market a prod to the downside:

In the UK, Moody’s double-notch downgrade of Barclays’ (BCS) debt didn’t help the FTSE’s (^FTSE) cause, although shares have recovered from their worst levels ahead of the US open.

At the moment I’m still running shorts in FTSE, Lloyds (LLOY.L) and HSBC (HBC) and waiting to see how currencies react in the US session.

Happy Trading.

Subscribe by RSS Subscribe by Email