A test for Sterling (2010-04-14 GBPUSD analysis)

The finally-confirmed save to Greece had led Euro to rally. Sterling followed as a result of surge in exports as well as trade deficit in February. However, Soros, having positions of betting the pound to decline, said UK had the room for currency devaluation in order to cut trade deficit. It is due to the financial crisis during which the UK government provided aids to UK banks and that net debt rocketed. So we might ask whether it would really happen, and when?



After using fibonacci projection, we could see that sterling is now resisted by the 100%-line. It seems to be a great obstacle for further rise of GBP. Also, the upper trendline may further prevent the pound to go any further. So here might be a test for this rally-wave, and it would be better for investors not to do any risky gambling here.

This is the short term technical analysis. In my opinion, due to such high debt ratio (to GDP), the next government might really consider a devaluation to rebalance it. So after the election in early May, pound might decline and Soros can gain lots from it.