Holding Short GBP/USD
We continue to hold our short GBP/USD position despite the pair rebounding off of technical support. Fundamentally, the Pound is a mess: declining industrial and manufacturing production; weak growth; deflation is a threat; unemployment remains high. The British economy is stagflating, and without a global turnaround, it is doubtful the Bank of England can engineer a recovery.
The Bank of England, last week, announced no further measures to support the British economy. But for a technical bounce and possible bidding on a strong EUR/USD, the Sterling remains poised to weaken further. The true extent of the decline will be made aware once the Bank of England announces another round of easing.
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