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  1. #31
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    Quote Originally Posted by ynot View Post
    There has to be the possibility of the Pound over correcting if May pulls of the no deal brexit. What do you think ?
    The higher you can push the price, the more lucrative the shorting. . .

  2. #32
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    It dropped like a stone when the referendum results came out....up and down a little in the 6 months following with one day dropping to a new low...yes, it could well drop suddenly...I don’t gamble on it and I wouldn’t. BUT i have taken my opportunity gambling that it wont last for the forward 5 years.

  3. #33
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    February, and another a year has ground past, making it time to look forward to asset and currency allocation.

    The USD/GBP rate sh*t itself last year only to recover and wind up roughly where it started:

    13/03/2019 1.3135
    10/08/2019 1.2027
    02/02/2020 1.3197

    So where to for the GBP this year?

    As far as I can see, the US wants a weak dollar, the UK wants a weak pound they can't both be right, which weakling will win?

  4. #34
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    Quote Originally Posted by GTM 3442 View Post
    February, and another a year has ground past, making it time to look forward to asset and currency allocation.

    The USD/GBP rate sh*t itself last year only to recover and wind up roughly where it started:

    13/03/2019 1.3135
    10/08/2019 1.2027
    02/02/2020 1.3197

    So where to for the GBP this year?

    As far as I can see, the US wants a weak dollar, the UK wants a weak pound they can't both be right, which weakling will win?
    The US has the presidential election in November and the UK faces the end of the transition period out of the EU in December. My guess is that Trump will be returned for a second term. The UK and the EU are poles apart in what they want from a new relationship. So I think the volatility will come from the GBP especially towards the latter part of the year.

    From recent past form, the current UK Conservative government is likely to put political considerations above economic and financial stability. Boris has said he will not extend the transition period. He has a large majority now so he would have to do a flip flop to change that ‘promise”. Upside potential for the GBP is possible if a comprehensive Canada plus free trade deal with the EU is incredibly negotiated within the year as opposed to a (more likely?) bare bones survival agreement with new border checks and tariffs.

    If the UK loses the just-in-time free trade with 50% of its export markets, without new trade relationships with equal benefits, I don’t think that is currently reflected in the GBP. My guess is that the GBP would have to drop to rectify UK competitiveness.

  5. #35
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    I'm inclined to think that the GBP moves more in response to politicalcertainty/uncertainty than it does to economic good/bad news. So I'm picking that there will be a slow decline in the GBP over the course of the year as the UK becomes slowly and slightly more politically fragile over the course of Mister Johnson's premiership.

    After all, a large parliamentary majority means that there are a lot more individuals and factions to be pampered, fed, and watered than is the case with a "normal-sized" majority.

    I think that the content of the "Final Brexit Trade Deal*" may well have a one-off effect (either up or down) but this will fade into the general trend quite quickly.

    I'm picking a descent through 1.275 as the time to start actively looking to accumulate pounds.



    * Final my *rse! This thing will drag on for years. Too many jobs, too much political capital, and too much money at stake for it to be allowed to end.

  6. #36
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    Quote Originally Posted by GTM 3442 View Post
    I'm inclined to think that the GBP moves more in response to politicalcertainty/uncertainty than it does to economic good/bad news. So I'm picking that there will be a slow decline in the GBP over the course of the year as the UK becomes slowly and slightly more politically fragile over the course of Mister Johnson's premiership.
    Maybe. The two are entwined. The Political environment affects the investment and economic environment. When No Deal had seemed more likely, the GBP dropped. So perhaps a mixture. If trade barriers are erected as a a consequence of implementing UK only hegemony over standards etc. with an impact on trade then I think inevitably the GBP will be affected.

    As far as political uncertainty is concerned, I think that the Boris Johnson faction has definitely triumphed within the Conservatives. So many mp's entered parliament as a result of Johnson heading the Con's campaign. From a party caucus split between remainers, soft brexiters and hard Brexit leavers, they now are all "hard Brexit leavers" even if some still think the best future for the UK would have been as a member of or closely aligned to the EU.

    However I don't think political certainty will preclude the GBP being sold off at various stages during Johnson's brinkmanship with the EU. There are still various hard Brexit and cliff edge scenarios affecting services and trade that could spook markets.


    Final my *rse! This thing will drag on for years. Too many jobs, too much political capital, and too much money at stake for it to be allowed to end.
    I don't think many Brexit leaders actually thought they would win a referendum. Just how much self-inflicted pain and subordination of other non-Brexit public matters will the public tolerate?
    Last edited by Bjauck; 13-02-2020 at 12:18 PM.

  7. #37
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    My opinion is that political certainty/uncertainty can initiate or reverse trends, while economic news can produce variations within trends.

    And that large parliamentary majorities act to multiply the number of factions within the governing party, making political management more complex. You can see this in the other day's cabinet reshuffle - the rewards of loyalty and the purge of the disloyal elements. But give it a few years, and there will arise factions which need to be placated.

    I'm coming to think that this year won't be a good one for the UK, the GBP, and UK markets, but also that it won't be a particularly bad one either.

    I think I'll sit there with my thumb up my *rse waiting for the GBP/USD to move outside the 1.275-1.325 range, quietly accumulating pounds and putting those pounds to work outside the UK.

    Good job I trim my nails regularly. . .

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