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An Anomaly Called the British Pound (revisited)

Mon, Nov 12 2007, 16:19 GMT
by Mihai Nichisoiu

Mihai Nichisoiu

For the notes gathered under the title 'An Anomaly Called the British Pound' and published here on FXstreet.com on September 19th I was noting:

''So, of course my attention has been fully focused on the British Pound as of very late, acknowledging in my letter dated Sunday, September 16th massive (and leading) selling pressures accumulating on the currency's (too) various fronts like against the US Dollar, and particularly the Euro and the Danish Krone:

'The world's major central banks - the Bank of England in particular - act nowadays like under the pressure of being caught between quite a rock and quite a hard place.

The Bank of England's recent lack of pro-active initiative relative to the global liquidity crunch - let alone the incoherence of its messages sent one way or another to the global markets - as well as the Northern Rock announcement have synchronized with the currency markets reloading selling pressures in the British Pound against the Euro and the US Dollar (and that at a time when the US Dollar really had some hard times mostly elsewhere across the board).

As well, within a large technical context, the British Pound looks vulnerable to a heavy downfall against the Danish Krone right through a long-term line of support being nowadays tested in the corresponding, GBP/DKK pair. The following, updated monthly chart of the GBP/DKK reveals a picture worth checking on a regular basis: (...)''

Two months in the afterwards I could only reiterate that reflection: beware of the British Pound's increasing vulnerabilities across the foreign exchange board.

I have already assumed a short British Pound position against a major European currency, and may further want to increase and even diversify my exposure if charted conditions turn a certain way.

Published on  Mon, Nov 12 2007, 16:27 GMT