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Cable Update (GBPUSD)

  • #433,521
  • Jun 26, 2016 2:33pm Jun 26, 2016 2:33pm
Quoting Liquidsnake
{quote} you still stick to your 1.51 theory on gap down opening?
I not patty to a chart at this time could you fib the low and Friday's close and see what we get thanks B
  • #433,522
  • Jun 26, 2016 2:34pm Jun 26, 2016 2:34pm
Quoting gammase1
{quote} All the best with yours
You too good luck . Regards
  • #433,523
  • Jun 26, 2016 2:34pm Jun 26, 2016 2:34pm
Quoting gammase1
{quote} I think a rate rise is the wrong move and would be surpised if one took place. It smacks of panic and is often seen as a challenge to the market to test the resolve of the CB - by selling to find out how high will they raise rates in the face of a slowing economy. When rates rise to counter currency weakness (RUB being the most recent example), a short term pop in the currency is common, followed by heavy selling. A steady depreciation in sterling will be accepted, along with the temporary effect on prices. Only if the increase in prices...
Disorderly currency devaluation must countered with an aggressive rate rise

I don't even understand how you can argue

the other thing maybe they dreamed about it - it should give a super strong boost to the an economy. but devaluation shouldn 't be disorder
  • #433,524
  • Jun 26, 2016 3:02pm Jun 26, 2016 3:02pm
Quoting kashirin
{quote} Disorderly currency devaluation must countered with an aggressive rate rise I don't even understand how you can argue the other thing maybe they dreamed about it - it should give a super strong boost to the an economy. but devaluation shouldn 't be disorder
When do rate rises to counter heavy selling of a currency work? Black Wednesday in 1992? Did the Central Bank of Russia succeed in halting the rout in the RUB through themany rate increases? In EM crises, of which there have been many, do they work?

If selling becomes abrupt and disorderly in the coming weeks, then co-ordinated CB action is the most likely first option, with an emphasis of buying of GBP and selling of JPY and CHF. A steady depreciation, along with continued compressed yields on gilts, won't trigger the BOE to raise rates.

In 1992, when the BOE raised rates to counter selling of sterling, it provoked further selling, as market participants tested the resolve of how far the UK would go to defend the currency with interest rates being pushed so high that they would cause a deep recession.
  • #433,525
  • Jun 26, 2016 3:05pm Jun 26, 2016 3:05pm
Quoting Fader123
Unusual to see not much of an attempt to close the gap from Friday close
50 pips

Early start tomorrow - good luck
  • #433,526
  • Jun 26, 2016 3:10pm Jun 26, 2016 3:10pm
Quoting gammase1
{quote} When do rate rises to counter heavy selling of a currency work? Black Wednesday in 1992? Did the Central Bank of Russia succeed in halting the rout in the RUB through themany rate increases? In EM crises, of which there have been many, do they work? If selling becomes abrupt and disorderly in the coming weeks, then co-ordinated CB action is the most likely first option, with an emphasis of buying of GBP and selling of JPY and CHF. A steady depreciation, along with continued compressed yields on gilts, won't trigger the BOE to raise rates....

Russia was extremely successful in preventing currency collapse
Turkey, India - take any

rising rates - fast and effective and sometimes the only possible solution
  • #433,527
  • Jun 26, 2016 3:14pm Jun 26, 2016 3:14pm
Quoting kashirin
{quote} Russia was extremely successful in preventing currency collapse Turkey, India - take any you should learn a little bit rising rates - fast and effective solution
and a temporary solution, one that leads to more selling and weaker growth. Interest rate increases did little to stem the fall in the RUB. The currency only recovered when the oil price bottomed.
  • #433,528
  • Jun 26, 2016 3:15pm Jun 26, 2016 3:15pm
I got the impression from reading Carney's speech in the FT that they would do nothing that would have an effect on jobs or growth

http://www.ft.com/cms/s/0/6e7d135a-3...ed7b6126f.html

So I cannot see interest rates being raised
  • #433,529
  • Jun 26, 2016 3:15pm Jun 26, 2016 3:15pm
Quoting elbert3
{quote} I not patty to a chart at this time could you fib the low and Friday's close and see what we get thanks B
As above any body fib the move ?
  • #433,530
  • Jun 26, 2016 3:17pm Jun 26, 2016 3:17pm
Quoting Fader123
I got the impression from reading Carney's speech in the FT that they would do nothing that would have an effect on jobs or growth http://www.ft.com/cms/s/0/6e7d135a-3...ed7b6126f.html So I cannot see interest rates being raised
Exactly. Any inflation pass through from a weaker currency would be seen as temporary and very unlikely to lead to higher wages, as the prices rises come at a time of a demand shock. A rate increase (or increases) would further damage domestic demand.
  • #433,531
  • Jun 26, 2016 3:25pm Jun 26, 2016 3:25pm
Quoting gammase1
{quote} and a temporary solution, one that leads to more selling and weaker growth. Interest rate increases did little to stem the fall in the RUB. The currency only recovered when the oil price bottomed.

they needed to prevent the collapse - the did it

I can't even understand how you can argue with it

BoE of England may have to do the same - if GBP goes down below 1.2 in the next week - they may need to raise rates until dust settles
  • #433,532
  • Jun 26, 2016 3:41pm Jun 26, 2016 3:41pm
Quoting kashirin
{quote} they needed to prevent the collapse - the did it I can't even understand how you can argue with it BoE of England may have to do the same - if GBP goes down below 1.2 in the next week - they may need to raise rates until dust settles
I base my argument on economic history. Use Black Wednesday as a prime example for a case study on sterling.

Rate rises are highly unlikely to be on the immediate horizon, particulatrly when gilt yields are at record lows - this shows how sensitive to interest rates investors currently are on sterling denominated assets. There has likely been a significant demand shock caused to the UK's economy (which actually warrants cutting rates), from Brexit and all the related uncertainty, and any increase in interest rates (as Carney knows) will deepend this malaise and would make any higher rates unsustainable and self-defeating (as the market would know). Therefore, I believe a neutral approach is on the cards from the MPC.
  • #433,533
  • Jun 26, 2016 4:06pm Jun 26, 2016 4:06pm
Quoting kashirin
{quote} you say utter nonsense during black Wednesday devaluation was just 6%. rate rise was just for 1 day. if they left it for several day they would got what they wanted even though current situation can not be even remotely compared to black Wednesday - devaluation on Friday was more than 11% and I say rising rates will happen if GBP goes under 1.20 - whcih will be triple of what happened during 1992 next British economy will be supercharged if GBP goes under 1.2 RE will go bananas as overseas investors will step in and Inflation will rise significantly...
The interest rate increases on Black Wednesday had no effect in keeping the UK in the ERM. Speculators knew it (both the ERM and the demand zapping high interest rates) was unsustainable and kept on selling, causing the government to throw in the towel and exit the fixed rate mechanism.

CPI in the UK went above 5% in 2011 and was duly ignored by the MPC, who saw it as a temporary pass through and one that would not cause upward pressure on wages and, therefore, maintained the ZIRP (and rightly so).

Another example for you on how increasing interest rates isn't as effective as many believe; this time Sweden from 1992:

"In 1992, the crisis coincided with a currency crisis in Europe. In defence of the Swedish currency, the Krona (SEK), the central bank, at one stage, briefly raised interest rates to 500%. When the defence of the currency failed, the Swedish Krona was devalued on 19 September"

Anyway, time will tell. Interestingly, though, David Blanchflower (ex-MPC) was calling for a 25bps or 50bps cut to the Bank Rate following the Brexit result.
  • #433,534
  • Jun 26, 2016 4:22pm Jun 26, 2016 4:22pm
How low will she go? There aren't support/resistance on my chart anymore since price has never gone this low before. I really don't know how to trade except maybe get in a short and hold.
I wanna be a billionaire so freaking bad!
  • #433,535
  • Jun 26, 2016 4:32pm Jun 26, 2016 4:32pm
Quoting kashirin
{quote} Russia was extremely successful in preventing currency collapse Turkey, India - take any rising rates - fast and effective and sometimes the only possible solution
They were? Russian a Ruble tanked from around 30 to a low of around 80 before rebounding a bit
  • #433,536
  • Jun 26, 2016 4:51pm Jun 26, 2016 4:51pm
Think that we are going to test Friday's low
London open will be interesting - usually Asian selling carries over into London
But expect some big swings when London opens
  • #433,537
  • Jun 26, 2016 4:59pm Jun 26, 2016 4:59pm
Quoting stylinex
{quote} They were? Russian a Ruble tanked from around 30 to a low of around 80 before rebounding a bit

yeah, too successful

it was expected it would go to 120 within days and then below to who know where
but when they raised rates it went straight from 80 to 50. it was the best performing currency in 1 st half of 2015

after that they decided they don't want 50 so they lowered again and it went straight back to 80

so maybe they were too aggressive as they wanted to stabilize it around 65

but anyway if you want to stabilize currency - raising rates it's what doctor order
  • #433,538
  • Jun 26, 2016 5:12pm Jun 26, 2016 5:12pm
yea I have lower before ,its bearish under that last D1 zone ,but I wonder if we see free fall ,location is continuation with possible problems
its unusual situ

month + 6 month this Fri

Quoting thirdforex
How low will she go? There aren't support/resistance on my chart anymore since price has never gone this low before. I really don't know how to trade except maybe get in a short and hold.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: 1 gbp USD d1 (DFB).png Size: 31 KB
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On-site guru & also FF member's' psychiatrist, when not drinking tea
  • #433,539
  • Jun 26, 2016 5:18pm Jun 26, 2016 5:18pm
147 short from now chasing down to 130 ..
see if we get into the one twentys ..
Attached Image (click to enlarge)
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  • #433,540
  • Jun 26, 2016 5:29pm Jun 26, 2016 5:29pm
Quoting dean1star
147 short from now chasing down to 130 .. see if we get into the one twentys .. {image}
Congrats!
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