News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
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British Pound Extends losing Streak vs. US Dollar - Stops on Support at 1.22

March 17, 2020 - (Gold Market Wire) - The Talk of the Town this morning is none other than the state of the British Pound - and it is not looking good. Now down 8% over 7 trading sessions, the Pound is sitting on support at 1.22 to the Dollar, threatening another lurch lower.

The trend line is clear - as is the line of support. The Pound needs to hold here.

uglier than a rainy day in Clackton-on-Sea

Below 1.22 we can move fairly swiftly to 1.20, where the real battle will take place. A string of closes under 1.20 will provide the ammunition needed for a proper Sterling crisis and a chance to revisit the parity level of 1985.

The reasons are not difficult to find. 1.8 trillion pounds of debt, which, at 86% of GDP, is flirting with Rogoff and Rheinhart's magic 90% 'point of no return' level. Near-record current account deficits aren't helping either.

Then, there's the trade deficit. Also remarkable.

just plain ugly

The combination of macro-economic indicators is a bleak picture for the British Pound. But, don't think its recent troubles are a result of Brexit. The Euro is fairing just as bad, and is setting up for the next leg down.

For all the US Dollar haters in the market, the American currency, flawed as Jim Rogers says it is, is still the only place for big money to park and the only economy big enough to withstand an attack on its currency. Short it at your peril...despite what the GoldBugs say.

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