Looking bad for sterling. With oil remaining above $55/bbl real inflation should be creeping up.

Look at it this way....goods costing $60 barrel in USD would have translated to £31.27 at 1.92 (rate as of 01.jan.05) Now it's £34.52 at 1.74 (rate as of 10.jun.05)

This, if my maths is correct, is an increase of 10% in 6 months.

A falling pound will hurt importers who will have to increasew their prices to cover the currency hit (or cut costs further)

Don't we import loads of stuff and rely on our services sector for GDP

Nearly 70 per cent of GDP in the UK is accounted for by private consumption... the share of manufacturing in the UK economy has declined relative to the services sector faster than in most other industrialised countries, and manufacturing now represents less than 20% of national output... The services sector now accounts for two thirds of GDP, and the financial and business services sector contributes almost one-fifth of GDP. There was a deficit of $24 billion on the current account balance of payments for 2001. (See Economist Intelligence Unit Country Data - Britain.)

Yes.

http://www.optimumpopulation.org/opt.more.economy.html

for 30 mins, thats pretty tranquil.

Maybe just wishful thinking but I think the pound is about to get a kicking:

I'm out (of sterling).  Feels great. 

Don't know what's holding it at these levels, but suspect it won't last.

JY

LONDON, Aug 30 (Reuters) - Sterling fell to its lowest level in three weeks against the dollar on Tuesday after Bank of England data showed the lowest rise in mortgage lending in three years in July.

Mortgage lending rose by 6.45 billion pounds last month, compared with June's 7.06 rise and forecasts for a 7.1 billion increase. Net consumer credit also rose less than expected.

"Sterling is a little shaky and the market is trying to push it lower against the dollar and the euro," said Peter Fontaine, currency analyst at KBC in Brussels.

"It does show that the Bank of England is a bit too optimistic regarding the data and a reality check needs to be done."

Sterling fell to $1.7876 before reboudning slightly to $1.7887 by 0850 GMT. It was at 68.28 pence per euro, down a quarter of a percent on the day.

if you are into charting then it is worth looking at the 6 month charts for $vs£, EU and Yen - all charts show the $ as a sell - the obvious risk is that charts are based on what has happened historically and any asset may find a higher low, lower high etc.

Just thought I would refresh this thread. We are now at 1.7437 and descending.

ok - anything i highlight, do the opposite

Good try!

where do you think this can get to
how low??

ok 1.72 i am getting very worried now

Touching the trendline again, may be time to place a short on GBP vs USD. I shall wait until the afternoon and make my decision when the US PPI data is released. Resistance at about 1.77.

- "The recent strength of sterling," muses Tom Tragett,
your editor's expert currency contact, in a note. "It
seems most unusual - leaving aside the M&A flows -
especially given the extremely poor political domestic
backdrop and our pretty innocuous economy. But it all
makes sense if you figure that central banks are
conducting 'reserve adjustments'...getting out of US
dollars...and that some - mostly Middle Eastern banks -
clearly favour the Betty Grable."

- The Betty Grable? Cable is the name forex traders give
to buying sterling when selling dollars. Geddit? But
still this doesn't explain the almost phenomenal
strength of the proud pound in your pocket. Sterling has
risen from $1.73 to $1.86 in the past month alone. How
come?

- "Greenspan's famous conundrum has all but gone," Tom
notes. "Thirty-year US bond yields have surged as the
price of the bond itself has dumped from 97.25 at the
mid/end March to 89.50 at the close last week. This fall
in the 30-year bond price as coincided with the rise in
sterling over the same period. So someone's exiting US
Treasuries and piling into pounds. I reckon it's the
Japanese..."

- Regular readers will recall that the Bank of Japan has
an open position of some several hundred billion
dollars, bought when it wanted to depress the Yen and
stoke Japan's runt of an export-led recovery in 2003/4.
But they might not know what next-door's 'For Sale' has
got to do with Japan's post office savings accounts.

- "Naturally, Japan's intervention to buy dollars was
stuck into US Treasurys," says Tom. "Even when yields
dipped below 4%, they still paid a whole heap more than
Japan's own zero-rate bank deposits. Now of course, with
the Japanese economy on the up-tick, they might have
decided it's time to lighten up on their dollar
holdings. The world and his dog know the greenback is
due another tumble. Why play sucker and keep hanging
on?"

- Tom Tragett: "But the Japanese are the biggest holders
of US Treasury debt in the world. So they could never be
seen selling dollars and buying yen in the open market.
It would be like screaming fire in a crowded pub. The
dollar/yen would collapse into free fall. And this makes
their position unmanageable..."

- So the only way for them to remove the risk of a
dollar fall versus yen, says Tom, is to switch the
position slowly into another currency. "For example,
they would sell their Treasuries - and then sell the
subsequent dollar receipts for, say, sterling, for want
of a better protagonist. In order for this not to show
up immediately in their official reserve figures they
could use Kampo – the Japanese Post Office's life
insurance pot - to buy the sterling discretely in the
market over a period of several weeks/months."

- Take heed, warns Tom. "I am not saying that the BOJ is
buying sterling – and I'm certainly not advising anyone
goes long GBP/JPY just yet. But clearly someone very big
is getting into the pound...and it could be that the
Chinese, US, UK and Japanese have done a deal to get
Tokyo out of jail when the Chinese Yuan does finally
float and sink the dollar."

you re all wrong

1.9 thereabouts