More Pounding Ahead

Above is the weekly action of the British Pound. There is some short term support just below the area we are in so I would expect some higher bounces off these levels in the next few weeks.


On the daily chart, it appears that we may be in for a bit of back and forth as it bounces around between the 1.55 and 1.64 levels. I am looking for any rallies to sell. A solid break below 1.54 would mean global trouble is imminent. I don't expect this dead ahead, but believe that this may take a few months to unfold, although it is best to be prepared and limit any exposure to British stocks, gilts or the economy immediately. There is room for a rally to the 1.67 - 1.70 area, but I do not expect to see it. If it occurs over the next few weeks, it could be the selling opportunity of 2010.



I believe that the British Pound is the next accident waiting to happen. There is a possibility that one of the Scandinavian currencies could fall first, but I am not sure that would have that serious an impact. There are Eastern European countries, like Poland, Hungary, Ukraine, Baltic states, etc. that could also fail first. If so, those would likely feedback to affect the Swiss Franc or Euro. While these possibilities should not be discounted, I am betting that the Pound will be the major currency that gets hit first.