Why fear GBPUSD’s 8th weekly fall
City Index August 21, 2014 11:06 PM
<p>This week, GBPUSD will post its 7th straight weekly decline, which would be the longest losing streak since summer 2008, when Bank of England intensified […]</p>
This week, GBPUSD will post its 7th straight weekly decline, which would be the longest losing streak since summer 2008, when Bank of England intensified its easing campaign.
If GBPUSD also falls again next week, it will be the EIGHTH consecutive decline, something not seen since the 1976 sterling crisis.
What happened in 1976?
In 1976, the UK approached the IMF for loan assistance to manage an economy rife with soaring inflation and unemployment. GBPUSD had collapsed by nearly 25%. In September 1976, the IMF approved a record £2.3 bln loan, forcing the UK to sell £500 mn shares in BP as partial condition.
This month’s sterling declines were largely driven by slowing wage growth, which played a major role in revising down interest rate hike expectations and countering the positive impact of falling unemployment and improved growth.
A run-down of the important negatives and positives to GBPUSD is found here.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.