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.