Your Opinion is Welcome on the GBP/USD Decline | Forex Factory

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Your Opinion is Welcome on the GBP/USD Decline

  • #1
  • First Post: Jan 19, 2016 1:15pm Jan 19, 2016 1:15pm
Hello All,

First time starting a thread here. I've been watching GBP/USD "fall from the sky" and I am having difficulty understanding the underlying fundamental for this, (assuming there is one). Example today's news (19-Jan-2016), saw GNP steady, while not outrageously great, not terrible either. However, GBP/USD continues to slide.

I thought there might be a correlation with Oil, but don't see it on the charts technically. Can anyone offer an "adult" opinion?
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  • #2
  • Jan 19, 2016 4:01pm Jan 19, 2016 4:01pm
In any way whatsoever, does it HELP to try and figure this information out? If its just for the hell of it, I get it. If its to try and make money, then fahgeddaboutit.
There's always money in the banana stand.
  • #3
  • Jan 19, 2016 4:56pm Jan 19, 2016 4:56pm
Quoting LizardGizzard
In any way whatsoever, does it HELP to try and figure this information out? If its just for the hell of it, I get it. If its to try and make money, then fahgeddaboutit.
Actually, yes it does. Understanding everything about the "why" anything occurs is very helpful for me. There may not be a logical explanation and I understand that it is opinion. But this information is useful to me. As I do not live in the UK I thought that someone who did might profer an opinion. Are your remarks meant to offer an opinion or simply chide me for knowing less than you do?
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  • #4
  • Jan 19, 2016 5:21pm Jan 19, 2016 5:21pm
I absolutely didn't mean to be chiding, so I apologize for coming off that way. I think my attitude simply stems from perusing these and other boards for years and observing that no one has ever or will ever be able to explain short term price movements with fundamental information. The number of times someone has posted "the news indicated this so why is price doing THAT????" is a very very large number indeed. I'm sure you've noticed that as well. Thus, if simply interested in the possible economics behind it for academic reasons, then I get it. But for actual in-the-trenches trading, I find it of little to no use and often is detrimental in its influence. That's all. but I probably shouldn't have offered an opinion where one wasn't asked for. I'm certain there are some very smart people here somewhere though who have some actual economic opinions that could shed some light. I'm backing out of the room slowly now.
There's always money in the banana stand.
  • #5
  • Jan 19, 2016 8:28pm Jan 19, 2016 8:28pm
I feel the UK exit from EU is being discounted by the market. Though the politics does not show such decisive opinions, living in UK , I feel the referendum looks like a British exit. We need to look 1982 sterling crises. The current rate hovers a value of the sterling without Euro backing and I feel it reflects to UK Euro sentiments.....
  • #6
  • Jan 20, 2016 2:58am Jan 20, 2016 2:58am
Lads, lads, lads! It's the interest rate news, simple as that.

Carney told the country yesterday we might not be looking at any interest rate increases for whole of 2016. Genuine surprise - everyone figured we'd be following US so it's v. bearish.
  • #7
  • Jan 20, 2016 8:02am Jan 20, 2016 8:02am
Quoting LizardGizzard
... I'm backing out of the room slowly now.
No need to back away. I understand that you are only trying to be helpful. I generally do NOT use the fundamental reports to trade on a day-by-day basis, however, I find it interesting to note the fundamentals on a long term basis, and THAT guides my day-to-day operations. Using this current example, I and wondering if the fundamentals point to a price break below the 2008 lows, which, IMHO would be very significant indeed.
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  • #8
  • Jan 20, 2016 8:05am Jan 20, 2016 8:05am
Quoting triphop
Lads, lads, lads! It's the interest rate news, simple as that. Carney told the country yesterday we might not be looking at any interest rate increases for whole of 2016. Genuine surprise - everyone figured we'd be following US so it's v. bearish.
Thank you for this information. Yes that is very helpful. I find it odd though given this announcement came just yesterday but GBP has been dropping across the board for about 4 weeks. Was there any "pre announcement" speculation about this news?
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  • #9
  • Jan 20, 2016 8:06am Jan 20, 2016 8:06am
Quoting Lawie
I feel the UK exit from EU is being discounted by the market. Though the politics does not show such decisive opinions, living in UK , I feel the referendum looks like a British exit. We need to look 1982 sterling crises. The current rate hovers a value of the sterling without Euro backing and I feel it reflects to UK Euro sentiments.....
Also this is something I was completely unaware of. Yes I could see how this might drive prices lower, especially for those from the EU that are doing or have business in the UK. As well it makes UK imports more competitive with EU products.
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  • #10
  • Jan 27, 2016 3:07am Jan 27, 2016 3:07am
UK fundamentals have been strong for about three years - and are still strong now. GDP Growth remains relatively high and unemployment is steadily trending lower. When this happens, it generally creates inflation, which forces central banks to raise interest rates increasing the value of the currency.

Due to the growing economy, everyone expected inflation to force the BOE to start raising rates early in 2016 .... so they bid up the pound thinking it would soon be worth more than it is worth now. Problem is, inflation didn't really kick in the way it normally would .... largely due to the oil price crash, which has kept the price of consumer goods & services artificially low.

Now, instead of raising rates in early 2016, the BOE has pushed its expectations out to 2017 or even later, causing the correction.
si hoc legere scis nimium eruditionis habes
  • #11
  • Jan 27, 2016 5:49am Jan 27, 2016 5:49am
There is no doubt that the economic indicators for UK are strong enough, the employment sector is at boom, GDP numbers are expected to come far better, they are getting closer to their inflation target but the sterling has been under pressure since the start of this year. this is all because the Governor of BOE, Mark Carney has continued to give dovish statements exclaiming that UK won’t be in the position to raise interest rates this year and he has even eluded to a possible cut to combat low inflation levels. Over this, the monetary policy committee sent a shock wave through the market by stating the upcoming referendum in regards to the UK making an exit from the European Union is already to set a negative impact on overall economy.
  • #12
  • Last Post: Jan 27, 2016 9:04am Jan 27, 2016 9:04am
Quoting numbnuts
UK fundamentals have been strong for about three years - and are still strong now. GDP Growth remains relatively high and unemployment is steadily trending lower. When this happens, it generally creates inflation, which forces central banks to raise interest rates increasing the value of the currency. Due to the growing economy, everyone expected inflation to force the BOE to start raising rates early in 2016 .... so they bid up the pound thinking it would soon be worth more than it is worth now. Problem is, inflation didn't really kick in the way...
man i love ur posts and are really helping me in understanding the way economy works
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