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What Will Happen To Dollar And Pound?

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Two articles from today:

Dollar falls

The dollar lost ground on Friday after a report showed the U.S. economy growing in line with expectations but with slowing inflation, raising concern as to how much longer the Federal Reserve will raise interest rates to dampen inflationary pressures.

Sterling was last up 0.1 percent at $1.7580. Data showed British consumer confidence picked up in July despite the deadly bomb attacks in London at the start of the month.

But analysts said the data was unlikely to change expectations that the Bank of England would cut rates from 4.75 percent on Thursday.

Another article about the same time:

Dollar gains

U.S. dollar up, gold down in Europe

7/29/2005, 7:16 a.m. ET

I am confused.

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Its a topsy turby world engineered to keep you confused and in indecision, just the conditions prime for the madness of crowds to take hold, with potential for limit less hope, and limitless fear.

Can you see the wood for the trees?

Like if your an informed property bear and your informed with the economic recession in the uk and its extent, then you really know that a cut in rates wont achive anything. So My view is i see the irational rise in sterlin as a coiling of the spring to so when a piece of data does bring realisation then the drop can have follow through.

The media mantra of a rate cut is some thing i convinced wont happed.

There a re a few senarios...

1) No cut on thursday and GBP rallies media will say rate cut was priced in before so with rates higher then GBP deserves a boost.

2) Rate cut on thursday (economic mis managment is a hall mark of mordern times) Pound rallies as media say this should herald the recovery and euro recover will take us up again..

3) Rate rise note the paniking effect of this will be maximised by the media mass spell casting brain washing of certain rate cut. This will have the potiential to instill real fear into the right market and ithink this will come but later when it become one of the bunch of straws that not only break the camel back but destroy confindence.

In each of the 3 cases above the opposite effect on GBP can happen with equal probability and equal measure of either rationality or irrationality.

BUt just tlike the fundamentals to the housing market sentiment will too worsen on GBP and in my view capital flight will be priced into GBP when the markets chooses to. I dont know when or by what route, But my current view is it will come.

If you agree you can play safe over the long term or try to time an entry ahead of a big move.

My view is the higher GBP goes the closer we may come to a step change like when the US rate rise gets priced in again. THe "STORY"

wil move back and forth...When you feel the crowd all commited to gbp long then conditionds are prime for the market turn when it does you need to make the call if this is the big move and the time to go USD long.

Sorry if this is a bit confusing, trying to explain my thoughts on a subject that is engineed to confuse is a part of the problem made worse by my poor writing skills. Sorry.


Edited by sp1

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  • 301 Brexit, House prices and Summer 2020

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