Auslanco - GBP/JPY and GBP/USD (newstrade)

thanks WinterWhite

Sterling subdued as banking worries linger
Tue Sep 18, 2007 9:02 AM BST


LONDON, Sept 18 (Reuters) - Sterling matched the previous day's one-year low against a basket of currencies on Tuesday as lingering concerns on the state of the UK banking sector led investors to shy away from relatively risky carry trades.

The pound -- which has the highest interest rates in the Group of Seven industrialised nations -- has benefited from the carry trade where investors sell low yielding currencies like the yen to fund purchases of higher return assets.

However the rush by Northern Rock customers to withdraw their savings from the embattled mortgage lender has fed into heightened risk aversion and a sharp sell-off in the pound since last Friday.
Banking stocks rallied and sterling recovered a little ground on early trade after finance minister Alistair Darling announced late on Monday that the British Government guaranteed deposits at Northern Rock.
However, the pound is likely to face continued pressure according to analysts.

"The banking sector is not out of the woods quite yet," said Daragh Maher, currency strategist at Calyon. "There seems to be some underlying support for the pound but the pound can't fight against the stream of bad news."
At 0741 GMT the pound was steady against the dollar at $1.9938 <GBP=>, off an earlier one-month low at $1.9882.

The euro was also flat at 69.51 pence <EURGBP=>, having earlier hit a 17-month high at 69.73 pence.
On a trade weighted basis the pound held at 102.1, its lowest level since September last year <=GBP>.

Investors will look to UK inflation data at 0830 GMT for further clues on the health of the economy and prospects for interest rate cuts from the Bank of England.

"If CPI is softer than expected it could heighten expectations for a rate cut as it will enable the Bank of England to have more room to cut rates, which would be negative for the pound," said Calyon's Maher.
Economists polled by Reuters predicted CPI to rise by 0.4 percent in August compared to a 0.6 percent fall for July.

Here's the solution.

Anyone have Bernanke's cell phone number......

Cut the funds rate by 0.375 rather than the suspected 0.25 or 0.50

That will throw all the markets off guard, the talking heads will need another
month to analyze this unforeseen number given in the fed rate decision and
the reaction will be beneign.

It appears to me, that if price retraces within the next half hour to around the 4H 5SMA, the 4H candle would close as a great big friggin' gravestone doji.

this may shoot up within this 30 mins... scalp long with caution

The best analysis: Price will go up or down after the news

Dojis (including special gravestone and dragonfly dojis) are more meaningful after an evident trend than at the middle of it

why do you think so? shouldn't Londoners be closing their long prfits before the close of their session in anticipation of the big news in 3 hours?

I just got off the phone, he said he was always against cutting the rates and he is not going to change his direction now, because some people can't control their shopping addiction.

Let's predict what Ben might do..

I say 'no rate cut'

Subscribed

I don't know what would Londoners do.. But my chart says.. this could shoot up soon

Karmo,

Thanks for the answer before about metatrader. Theoretically, what will happen if the rates are not cut. I know there is no way to tell the future, but what would be expected. I dont know how the rates are supposed to affect crosses...any help would be great.

As much as I think no cut is the right response, I fully expect .25.

You would see an immediate fall in both the US stock market and the yen crosses. The dollar would also strengthen immediately.

ok, thanks a lot markam.

I say .... 0.25 cut coming up .. with strong language for further future reduction.

I have a penant continuation formation on my 15M as well

For some reason the phase, "What came first, the chicken of the egg?" just came to mind. But regardless, it's too late for this to happen anyhow.

I don't think we will get strong language about a reduction. Big ben has been stressing that they consider inflation to be the feds most important issue. If they back completely away from language about inflation, they will completely destroy their credibility.

I expect some unique language explaining a rate cut at a time when inflation is a real concern, and leave wiggle room for increasing again.