Just like the euro, the British Pound too is refusing to oblige and fall against the US dollar and is back at levels last seen in January. This is despite the UK economy hitting a brick wall as a result of the credit crunch, a collapsing housing market and a lame duck government. Based on these fundamentals the assumption would be to sell cable across the board. Not so, the Pound has actually been sold off against the euro. This has resulted in much pain for those UK citizens living in Europe and receiving an income in sterling. They have seen the value of this income fall by almost 25% in one year! The strong euros to pounds exchange rate has also affected anyone in the UK wanting to buy property or even holiday in the eurozone. Everything is now over 20% more expensive than last year.
To return to the issue of UK pounds to dollars, in my humble opinion I do not believe we have seen the last of cable touching the 2.1 level. Having refused to fall below the pivotal 1.94 level as well as having to face a whole series of resistance levels you can still expect the pound to travel right back up to 2.1 and possibly beyond. Only a weekly close between 1.94 and 1.95 would force a rethink.
For those of us here in the UK it is obvious where we should be holidaying (assuming there is any cash to spare) and that is anywhere in the US or dollar pegged country.
