UK Shares End The Week On A High

A good bid returned to shares with the FTSE (^FTSE) setting the pace. Sterling survived a scare story about its credit rating as an appetite for risk saw the Pound and Euro gain at the Dollar’s expense.

In between my short FTSE bet being offside yesterday and it being even more offside today, I closed out part of it for an OK profit last night at 4001. Of course now I’m cursing not having closed more, but that’s all part of trading.

I guess this move higher was on the cards; I mentioned yesterday that the lows and highs were both getting higher. However, the power of today’s rally wasn’t so obvious as to make me shut down my remaining short bet! For the moment I’m happy taking a bit more pain as I still reckon we’re due another fall.

I made a few quid shorting GBPUSD this morning, but it was hard work. On another day Sterling would have been totally trashed on stories of its credit rating being reviewed, followed by the worst drop in GDP since the 1970s. I sold GBPUSD at $ 1.4656 when I first caught the story, well before 7 o’clock. It was risky because my charts weren’t flashing up a sell signal so I used a smaller bet size than normal. My trade fluctuated from small profit to small loss until the awful GBP numbers gave it a further push lower.

I reckoned we could see a half-decent fall so spurned the chance to sell at $1.46. Eventually, as the price edged back up I closed out at $1.4629 for a 27-pip profit. Better than being slapped with a wet fish but not the profits I was looking for.

The price did drop below $1.46 briefly later on this morning, but it’s since rallied up through $1.47 as risk appetite returned to the markets. So what’s been going on? Rather than being the main attraction, Sterling got caught in the crossfire between the Dollar and Euro. Traders were ready to sell the Dollar on further moves by China to reduce its reliance on the Dollar (check out an excellent summary in today’s Market Watch).

Meanwhile, the Euro became the currency of choice as Germany’s IFO number followed yesterday’s Eurozone PMIs in beating expectations. The EURGBP rate pushed ahead to £0.9050. Later on the credit rating agencies let Sterling off the hook, saying that the UK wasn’t on credit watch. Cue for Sterling to take up the running, sending EURGBP back below £0.90.

I’m currently running a short bet on FTSE, which is 80 points offside as I write, and my patient short bet on Lloyds Bank, which is an average of 10p offside. I’m not going to trade currencies or gold this afternoon ahead of the World Bank’s weekend meeting. Oh and don’t forget details on the banking stress tests will be released at 7 o’clock tonight.

Hey, even if you’re only half-interested in rugby this weekend looks compelling; 6 teams in with a shout for 4 play-off positions, all kicking off at 3 o’clock tomorrow. I’m hoping to get to the Rec to see Bath qualify with a win over Sarries.

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