The US dollar continues to lose ground in value compared to the Sterling. The rate of these two currencies, often referred to as “cable” or “the cable”, because it was the first information transmitted over the first transatlantic cable in the late 19th century, is, like the relationship between all currency pairs, a statement of faith and confidence in the currencies one relative to the other. In our case the market is quite clear in its sentiment that the GBP and its economy is in a relatively stronger position than the perception is of the US economy. Currencies are the stock certificates of economic zones. They represent a “share” or more precisely what one “share” i.e. dollar, will buy in the rest of that economy. When faith goes up in the economic zone, just like when it goes up in the perception of a corporation and therefore its stock, its price rises. The price of a stock is denominated in the currency of the market where it transacts, usually the local currency. The currency of an economic zone is denominated, by definition, in the currency of another economic zone. Sterling stronger than dollar. Buy sterling, sell dollar.
Day One of 2018
Daily Analysis - 02/01/2018