The reasoning behind my bullish GBP strategy was that the strict austerity measures and fiscal responsibility would be well greeted by the financial markets and would lead to some major inflows into sterling in the short to medium term. The massive job cuts in the public sector are supposed to be offset by a strengthening private sector and this would also benefit the UK economy over time. Last night’s GDP numbers show that there is no growth to take up any slack even before the austerity measures start. One hates to think what’s going to happen to the UK’s GDP after the belt-tightening.
Sterling has officially re-entered the ugly contest along with the EUR and the USD. I luckily got into my cable trade at a very good level so if we see another break back below 1.5750 and the 100-day MA, I will book most of the remaining profits and reduce the long position to a minimum.
Good luck today.
