One year outlook for GBP
Comment: Very frustrating as almost six months have gone by and we find ourselves in exactly the same position as we were in January. The sell-off from last year’s high at 2.1160 has taken Cable back to the pivotal 1.9400 area in a possible A, B, C-type corrective move. While we will not completely rule out brief, small ‘extensions’ below 1.9200, we see these as good buying opportunities for a rally later this year. Expect sharp swings either side of 2.0000 in Q3, moving back up to 2.1000 around year-end. Q1 2009 should be dominated by correction and consolidation, roughly between 2.0200 and 2.1200 with a squeeze to 2.1500 next summer.
A monthly close well below 1.9000 would force us to review, suggesting a major top is probably already in place.
