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Sterling: UK Budget Derails Bounce On Yen - 500+ Pips Slide
By Benny Nardino | March 13, 2008
Sterling-Yen, GBP/JPY - one of the most volatile crosses in the forex trading calendar has seen a huge slide from yesterday’s Asian Market high of 207.98 to 202.96. That was a move of over 500 pips in less than two days trading sessions for forex swing traders.
The bounce off the floor from Tuesday session was derailed by the “south-bound train” significantly aided by forex traders’ perception of UK Budget sematics. On this pair, we have now seen Monday support level of 203.57 violated this morning to a new low - 202.96. From the two day sessions this was against trend.
However, taking an overview of the market, the Sterling had fared well against the dollar, GBP/USD tracking the EURO strength. With the oil price on ascendency and gold commodity benefitting congenially, the resultant effect has been a steady rise up North. The euros, EUR/USD, on the other hand has gained the most from the dollar weakness and thus raising fears on the value of external investments flow into the US economy.
UK Economy.
On the contrary, what does the slide means to the Sterling? In the short-term, in spite of the UK Government ethusiasm on her economic growth for the future, the rest of the world have not bought to it. They still don’t believe it because numbers does not fit.
My opinion on this is that, projections beyond six months is nothing but false hope judging from the present global economic climate. Forex traders will continue to trade directions as long as there are profits to be made.
What’s your take on this?
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