Saturday, January 28, 2006

FX...cable (GBP vs USD) is set to enter a massive bear market...

Welcome to my blog...this will hopefully be the first of many. Have been
selling some Sterling against Dollars over the last few days, with the
FED set to go to 4.50% this coming week and probably going to continue
raising rates, it seems an obvious trade to sell £ against it, where you
have the Bank of England (BoE) at 4.50% also but going nowhere, and if
anything looking like the next cut will be down, as one of the nine BoE
members has already voted to cut rates.

Lets face it, currencies are driven SIGNIFICANTLY by interest rate
differentials, and the $ is going to pass sterling in having higher
rates...check out a chart of the rate difference over the last 20 years,
versus the exchange rate...looks to me like £ is headed for a collapse,
and could easily be through 1.50 by the end of this year (the chart is
frightening!).

With our good ol' Chancellor Gordon Brown having well and truly turned
the country from capitilist to socialist in terms of its
spending/taxation profile over the last 9 years, the UK economy is only
going downhill. Get out of your £ now.

Sold throughout the last 2 days, at an average of 1.7792 at £13 a tick
(ie. if it moves from 1.7792 to 1.7791 i make £13, if it moves all the
way down to 1.7000 i make £10,296). Also sold a call option expiry on
Friday Feb 3rd, strike 1.7900 for 43.3 points at £5 a point (so £216.50
if it expires worthless). All these levels are the Mar '06 future. Come on the $!

For those of you not familiar with spread-betting, it is an awesome tax
efficient way to play the markets...I use IG Index, but there is also a
few others out there (City Index/Cantor). You can trade ANYTHING from
Bonds/Rates/Equities/Equity
Indices/FX/Options/Gold/Oil/UK/US/Europe/Asia.....get involved!

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