BEST BET: SELL GBP/AUD

 

USD will be weak, and GBP will also be weak, so.....

 

Let us take a look at Friday's GBP/USD movement to see how the ups-and-downs of USD and news on GBP itself influencing the GBP/USD

Cable rallied to near 1.5750 in early European trade thanks to BoE MPC hawk Andrew Sentance's reiteration of his desire for higher UK interest rates and an article in The Sun headlined "We will survive spending cuts". Those gains were lost rapidly as fix-related selling dropped GBP/USD to what would become day lows at 1.5660. Better-than-expected German IFO came to the rescue, sinking the dollar, and turning cable back up. The rally stalled below 1.5730, however, as the dollar picked up the bid once more in the US morning, and held it much of the remainder of the day. GBP/USD ended back near its lows. EUR/GBP, though, sustained the IFO initiated rally, moving up from 0.8850 to nearly 0.8900 in the US afternoon.

 What the above is telling me is that if one merely looks at the USD side,the big test for cable is the 1.5650 level and whether it will hold. If it does, we'll like the prospects for the market to rally back up toward 1.60. If not, however, we'll look at 1.55 as the likely initial target.

 

So, why don's we look at GBP/AUD instead? At least the downward trend of this will not be influenced by the "weak USD" (as when USD goes down, the GBP/USD may go up). With GBP/AUD, when USD goes down, AUD/USD will go up, and will go up more thant the GBP/USD.

 

Strategy: SELL GBP/AUD at any rally

 I started recommending SELL GBP/AUD when above 1.6200, the close Friday was below 1.6000 psychological level for the second time within a week. I did target at 1.5850 previously, but the Friday movements were more convincingly that this pair will go a lot lower. At this stage, I will revise down the target towards 1.5500.

 It's a quiet start to the new week with neither data nor events on the UK calendar, and only a couple items from Europe.

There were almost "nothing new" at the G20, and I will look to more USD downside to resume, at least until 2-3 November.

 

Finally, let me tell you all a little story.

A man prays to God: " God the Almighty, please let me one time getting the first prize in Lotto as I never get it, and it will change my life? Please!"

This man prays everyday, every night, every week, every month, every year.

God is tired, and finally reply to him:

 " Hey man, let me pray back to you and beg you to "buy" a lotto ticket, please!"

 

Folks, I have been "RIGHT" all through the month on my recommendations. Please don't just "read", but do something----"open a position".