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Two weeks into the new year, and all to play for.  Sterling had a relatively tough week, and didn't really make any great challenge on the 1.22 level that I was looking for.  Instead the markets focussed on the relative calm that has fallen on the Euro since the ECB decided to make half a trillion Euros available to the Eurozone banks at 1% for up to three years, whilst still claiming that they were not going to be the lender of last resort.

Interest rates, QE and all that stuff

Yawn.  No change to either UK or Eurozone base rates this week, and no announcement regarding QE.  This all added to the soporific effect benefitting the Euro.  Let's all pretend there isn't really a problem and it might go away.

I don't think so.


A chartists dilemma

Chartists are forecasters who use props, charts actually, to justify their guesses.  Sometimes they end up with a dilemma, when their charts tell them something they don't really want to see.  As much as the current plight of the Euro may scream out UP,UP, the fact is that every time sterling has crossed the 1.20 line against the Euro in the past three years, it has then plummeted back down below that level; sometimes a long way below.  And it's not just once or twice, it's five times.  That's a bit like having all your money on a horse miles ahead of the field but coming up to Beechers Brook (first time round!), and it's never jumped it before.  

Hold your breath.


Fundamentals

Don't bother going there.  You'd have to trash both currencies.  Beer would be priced in dollars.  No, some new form of wizardry in forecasting is required, and it isn't charting.  Guesswork it will have to be.  Gut feeling.  Those of you who know me will know that I am blessed in that area (gut, that is, not feeling).  There will be times when economic data may get in the way; markets love their numbers.  Sometime they may even achieve a level of importance, but they always reflect the past, and it's the future we're really interested in.

No, dear reader, I can assure you that what you will get from me will be the real thing, a gut feeling based guess.  You can't ask for more than that ,can you? (can you?)

This week's GFBG

Euro land is still in a big mess.  Skilled politicians will try to smooth troubled waters, but under the surface there's a feeding frenzy of hungry dealers waiting to happen.  dealers really are like sharks; they smell blood and won't give up until sated.  The Eurozone is wounded, and bleeding.

1.24 in the next few weeks folks.  That's my gut feeling, or maybe it's that bacon sandwich...




a bientot,

Rob


If you have any questions or comments on this, or any other subject, please don’t hesitate to contact me, Rob Hesketh:
By phone on 0468 247758 or mobile 0631 787647
Or by mail at rob.hesketh@spectrum-ifa.com
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