GBP (British Pound)

[winston]

NEXT TOUR STOP: OUR NEW FAVORITE NICKNAME

You can always depend on traders to come up with great nicknames. For our next stop on our "world currency tour," we present you with our vote for the world's best asset nickname. Our stop is Great Britain.

For years, the letters "GBP" have signified "Great British Pound" in the investment markets… just like "USD" signifies "U.S. dollar." But as Tom Dyson profiled weeks ago, Britain's government has gotten so deep in debt, and treated its currency so badly, traders are now using GBP to signify "Gordon Brown's peso"… a knock on the country's prime minister and his financial bungling (and a knock on Latin America's time-honored tradition of currency crises).

For a picture of this bungling, we'll look at the GBP since 2009. The sovereign debt problems of Greece, Spain, and Great Britain became big news late last year. Since then, Gordon Brown's peso has lost about 8% of its value.

As Tom mentioned, Great Britain is just as broke as Greece or Spain… it's going to devalue its currency to make its debt payments easier… and this new downtrend has farther to run.


Source: Daily Wealth

[kennynah]

GBP = "Gordon Brown's peso"

wahahahaha...

i'm no clear on the situation there... not much great econ data in the last 2qtrs... i am inclined to think GBP will stay depressed against USD, CAD and AUD...

[greenhoney]

ust heard on the bbc this morning that the UKs' debt to GDP is at 70% (and still growing) and the last time the UK asked the IMF for funds in the 70's, the debt to GDP was only at 45%!!

i think they should re-phrase the PIIGS with U-PIIGS!!

[winston]

Pound Weakens on Concern Over Growth Prospects, Budget Deficit
By Keith Jenkins

April 30 (Bloomberg) -- The British pound weakened on concern the U.K. economy may grow at a slower pace than the U.S. and the euro region, hampering efforts to cut a budget deficit that’s the biggest among the Group of Seven nations.

Sterling declined against the euro on signs Greece may receive a European Union-led bailout and fell against the dollar after a report showed the U.S. economy expanded at a 3.2 percent annual rate in the first quarter.

A report last week showed Britain’s economy grew 0.2 percent in the first quarter. Opinion polls reinforced concern that next week’s U.K. general election will fail to produce a government with the support needed to reduce the nation’s budget deficit.

“The U.S. data were good, pushing sterling lower as investors looked to reduce positions before the weekend,” said Paul Robson, a senior foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. “Unless you have a really strong view on opinion polls and developments in the Greek situation, then investors will stay away from the market ahead of a potentially risk-laden weekend.”

The pound depreciated 0.6 percent to 86.89 pence per euro as of 4:43 p.m. in London. The pound fell 0.1 percent to $1.5309.

Sterling has climbed 1.6 percent against the dollar this month, its first increase since October. It appreciated for a second month versus the euro, gaining 2.4 percent in April.

Consumer Confidence

Sterling weakened as data showed U.K. consumer confidence fell to a three-month low in April. An index of sentiment fell to minus 16 from minus 15 the previous month, GfK NOP Ltd. said in an e-mailed statement. Economists had expected a reading of minus 15, according to the median of 16 forecasts in a Bloomberg News survey.

The U.K. economy will “crawl” this year and expand less than previously forecast as consumer spending remains weak, the National Institute of Economic and Social Research said today in a quarterly report.

Gross domestic product will increase 1 percent in 2010, according to the London-based research group, whose clients include the Bank of England and the Treasury. Niesr, which estimated economic growth of 1.1 percent in January, left its forecasts for GDP growth of 2 percent in 2011 and 2.2 percent in 2012 unchanged.

A YouGov poll for The Sun newspaper released yesterday showed Conservative support at 34 percent, with the Liberal Democrats at 28 percent and Labour at 27 percent. That would give the Conservatives 268 lawmakers, 58 short of a majority in the 650-seat House of Commons, Labour 261 and Lib Dems 90, according to the seat calculator on the U.K. Polling Report website.

Gilts Rise

Gilts advanced as speculation Greece was close to receiving a bailout spurred purchases before a three-day weekend. Monday is a holiday in Britain.

The yield on the 10-year gilt dropped 8 basis points to 3.86 percent. It fell earlier to 3.85 percent, the lowest since Feb. 5. The 3.75 percent security due September 2019 rose 0.59, or 5.9 pounds per 1,000-pound ($1,529) face amount, to 99.14. The two-year gilt yield also fell by 8 basis points, to 1.13 percent.

“Gilts are higher on position-squaring ahead of the long weekend as all eyes remain on Greece,” said Charles Diebel, a senior fixed-income strategist at Nomura International Plc in London. “The gilt market is closed on Monday, and European markets will have a chance to react to developments with respect to Greece and the U.K. won’t.”

Gilts returned 1.3 percent this year, compared with 3.7 percent for German bunds and 1.9 percent for U.S. Treasuries, according to indexes compiled by Bank of America Corp’s Merrill Lynch unit.

http://www.bloomberg.com/apps/news?pid= ... lgRoxhqSrY

[winston]

On CNBC:-

Darryly Guppy thinks that it can go down to 1.4

[millionairemind]

On CNBC:-

Darryly Guppy thinks that it can go down to 1.4

He makes his money commenting or trading?? Does anyone know?

[kennynah]

dont know who this fella is...

[kennynah]

eur/usd broke out of 1.247-50 region and took off...

gbp/usd is testing a critical breakout region at ~1.4455 since last night as eur/usd... it is now at that level... if this breaks out, same same story could happen...fly....

watch out

[kennynah]

so...at this point...it appears that gbp/usd has broken out of the short term resistance at ~1.4450..... if this is a real breakout, we have about 1.57 to target at over the next month or so...

[winston]

CHART OF THE WEEK: THE WORLD'S NEXT DEBT CRISIS

Not many people are following it, but there's an incredible race happening in Europe right now… one we predicted. It's between the paper currency of mainland Europe and the currency of Great Britain.

As you can see from this week's chart, it's a race to the bottom right-hand corner of the price chart.

More than three months ago, we highlighted the downside breakout in the British pound. The country's government has taken on a ridiculous amount of debt… which makes it a likely candidate for "the world's next debt crisis starts here" award. We told the euro to expect some competition on the race to destruction. Since our bearish note, the pound has relentlessly plunged to a 52-week low.

This is just the latest in the government debt train wreck of the Western world… and the latest reason to make sure you keep a portion of your wealth in "hard currency" like gold.


Source: www.dailywealth.com