Finally an update to my blog after a few weeks of silence! I have kept tweeting and giving my predictions and opinions while I have not been adding to this though; as some who follow me and read my tweets will have gathered I remain very much bullish on $GBPUSD (I hold the opinion that the exchange rate will go up), but I have not made any additions to this blog. I predominantly like to write about my actual trading, the progress I am making, big or important trades (to me) or what I am excited and worried about happening in the future. Unfortunately for reasons I shall explain, there has been a very reduced amount of trading for me and I seem to be in a state of waiting with a dash of anticipation and anxiety thrown in.
As many of you who do follow the markets will know, and soon those of you who do not follow the markets habitually will know also, the dollar has had quite a nice rally in the past few weeks, swinging from a several month high of 1.63 just before Christmas, to a 6 month low (or there abouts) of 1.567. During this swing, while I was short and wanted the exchange rate to fall, I was happy and trading was good. Unfortunately I only forsaw a drop to 1.585 at most and so from about 1.59 downwards, I have been expecting it to go back up / been bullish. This has yet to happen...
I have been bullish for a couple of reasons, the first of which is that I am British and therefore innately want Sterling to do well in order for my own life in this country to be better though when I have said this to others they have always said "But why do you care which is doing better, sterling or the dollar, you can make money either way?". I struggle to come up with an answer because that is the truth, I SHOULD be able to make money which ever currency is doing better because that is the whole point of trading. Unfortunately when I opened long positions, the market just fell straight through the bottom of them and continued down towards where it hit the buffers a few days ago, 1.567. So that's one reason I want the exchange rate to go up, however silly and existential to the market it may sound.
The second reason I am so, is because I don't see that the US economy is in any condition to regain strength against the pound to make the exchange rate drop any further. Yes jobs are being added, the nonfarm payrolls are being revised up and up and consumer confidence may be increasing but it seems as though people are being too short sighted in my opinion as to what is due to happen when the defict ceiling is reached (despite being delayed it will be "hit" sooner or later) and the US will have to make a move. It is highly unlikely it will default but to pay back debts in the middle of a recession (no it is not over yet) will definitely not be an appealing course of action as I am sure many can imagine. I simply see the economic picture as one where the UK has a much higher potential to pull itself back onto the rails of economic recovery before the US and see the pound sterling soar.
These are the main two reasons that I have been bullish and not anticipated a fall quite this large in the exchange rate; I have had one Twitter member discussing with me the possibility of the rate hitting 1.55 due to a mix of indicators and chart history etc, while this may be entirely possible I simply do not see it happening despite it only being a short way off. Personally, 1.65 seems more possible to me as even the low of 1.567 seemed a one day wonder as it struggled to push down the last cent of it and immediately bounced two cents back from it. The short blip back down towards 1.57 on Friday was unfortunate as I tweeted the day before that the climb was going to continue. Alas, fate must have seen this and thought that it would be fun to make me look like a bad predictor in front of my followers.
[ Before I continue, I have tried no end to understand a phenomena that struck the businessinsider.com website a couple of weeks ago but have failed at every turn. That is the story of the "Trillion Dollar Coin" and how coining one is meant to bring the US out of all it's problems, akin to the tale of the $100,000 note. I understand the basic idea and how it might work but I would like to understand the details so if anyone knows a good website for it or even just the basic principle of how it is meant to work and could let me know, that would be much appreciated. Despite the idea now having been apparently canned.]
So to bring this most recent addition to a close I would like to first off, say that over the coming weeks and possibly through February I am inclined to offer the prediction that the pound sterling is going to strengthen and the dollar, which I feel is very much over valued at the moment, will drop (even slightly) and we shall see the exchange rate slowly climb back above the week high of 1.586 and continue to see 1.60 and eventually tipping 1.61. I will of course re-evaluate my position upon seeing evidence that this is extrememly unlikely or in the case that we do indeed see a sub-1.55 level, but hopefully neither will happen...
Secondly, I have tweeted and followed my way to 855 followers on twitter (today) and a few hundred views of this blog and would like to make it abundantly clear that your support in reading this, reading my tweets, even just following me, is really appreciated and spurs me to put more effort into my trading and writing all the time. I value all the re-tweets and replies that I get and try to reply to them as fast as I can while still trying to do a bit of homework on each so I have a clear idea of what the discussion is about. Thank you so much for taking the time to read this and I hope you have enjoyed it and found it interesting!
Feel free to DM me or tweet at me and follow me @fxamatertrader or e-mail me for any longer points or discussions at fxamateurtraderuk@hotmail.co.uk. I have recently also added to my twitter that I am available to connect on LinkedIn as I wish to expand my real network into the trading industry. You can connect with me as "other" or "friend" using my above hotmail - visit my profile at http://www.linkedin.com/pub/toby-golledge/5a/76a/24a?trk=shareFB
I look forward to hearing any opinions, predictions or topics that you wish to discuss with me - thanks for reading.
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