GBP (British Pound)

[winston]

These Charts Will Save You a Fortune By Tom Dyson

LQD isn't the only indicator I follow to track the health of the market. I also watch the British pound...

The British pound is one of the most important financial indicators in the world. Britain was at the epicenter of the credit crisis. It had a huge housing and mortgage bubble... even bigger than the housing bubble in the U.S. Britain also had a huge banking and finance bubble. In this bubble, London became the world's largest financial center. Finance represents almost 10% of Britain's GDP.

In other words, the pound is the perfect symbol for housing and financial excess. When the pound is rising, it means the pain is subsiding and the storm clouds are breaking. When the pound is falling, financial misery is increasing.

Here's the chart of the pound. On Friday, the pound broke down to new four-month lows.

Source: Daily Wealth

[winston]

TOL:-

If the Pound can bounce, why not the USD ? Everyone is short the USD, right ?

[kennynah]

not everyone is short USD...becos anyone who is buying USD denominated assets will need to buy USD....

[winston]

THE NEXT WORST CURRENCY

Our chart of the week displays an asset giving the euro some competition in the "wet paper sack" contest.

To recap, we've tagged the euro as the weakest and most vulnerable currency in the world right now. Our chart on Friday showed how the euro plummeted last week. But now, Britain's currency, the pound, is saying "Don't count me out, old chap... My homeland is also choking on tons of bad debt and malinvestment."

Just recently, super investor Bill Gross warned that British government bonds are "resting on a bed of nitroglycerin." He's avoiding Britain's bonds and its currency due to huge levels of government borrowing.

To the right, you can see the market agreeing with Bill. Just this week, the pound violated its October low. This is a loud confirmation of Bill's bearish analysis. Euro: Get ready for a little competition on the race to the lower right of the chart!


Source: Brian Hunt, Daily Wealth

[-dol-]

Ah... still have my meagre pounds...

How many times have we rode a winning position to the top and then back down again into a loss?

[winston]

NO SURPRISE FOR THE POUND, BILL GROSS IS RIGHT

The message from today's chart: Bill Gross 1, British politicians 0.

About three weeks ago, we profiled the downside "breakout" in the British pound. Investing legend Bill Gross said Britain's government bonds (and therefore, its currency) were "resting on a bed of nitroglycerin," made of debt and malinvestment. British politicians publicly disagreed with Gross and assured the public that the government's finances are going to be fine.

The chart below displays the past year's trading in the British pound. As you can see, the market is taking Gross' side on this one. The red arrow marks our first "look out below" warning. This is when the pound hit its lowest point in four months. The currency then staged a flimsy relief rally, which fizzled. And in the past week, the pound just struck another new low (blue arrow).

In a world of runaway government bailouts and handouts, expect this kind of weakness to hit almost all paper currencies. And while the best traders can profit in the currency markets, the "sleep well at night" action here is to take a position in the only honest money around – gold.

Source: Daily Wealth

[kennynah]

The chart below displays the past year's trading in the British pound

W : thanks for all the articles...from time to time...i noticed that the charts mentioned in these articles are not shown here... it would be really helpful if you could please include them for visual impact... many thanks in advance...

[winston]

While the eyes of the world focus on Greece's debt crisis, investors in Edinburgh are busy preparing for the U.K. to be next.

Turcan Connell, which caters to rich families, expects the pound to lose between 20 percent and 30 percent against the dollar once investors turn their sights on Britain as the government sells a record amount of debt. Sterling slid to a 10-month low versus the U.S. currency today.

"Alarm bells were ringing in Greece for a long time and when it happened, it happened very quickly," Haig Bathgate, head of strategy at Turcan Connell, said at the company's offices in the Scottish capital. "The U.K. is in a similar predicament. It could be hit very hard."

Source: Bloomberg

[kennynah]

i think it is generally agreed that pound will falter against usd in the next 6-8 weeks..and maybe even longer...

[winston]

THIS CURRENCY TRADE IS SCREAMING

"Wow." That's the word that describes the massive decline in the British pound since we said "look out below" last month.

On February 6, we showed you a chart of the impending breakdown in the value of Britain's paper currency, the pound. Britain's government is a world leader in excessive spending and excessive debt. Since "there ain't no such thing as a free lunch," it was only reasonable to expect the breakdown to lead to more pound weakness.

But even we didn't expect the clobbering you see in the chart below, which shows the past year's trading in FXB, a fund that tracks the British pound. FXB has lost 4.3% in the past month. While this doesn't sound like much, it's an enormous fall for a major currency... one millions of people must use to carry out basic transactions.

Currencies are the aircraft carriers of the financial world. Once they get a head of steam built up and begin trending, they take a long time to change course... so currency traders can continue to take a bearish bias here. Or you could take the excellent "sleep at night" currency advice

from our colleague Porter Stansberry and simply trade paper pounds for gold and silver.

Source: Daily Wealth