Nicole Elliott, esteemed technical analyst recommends that with the summer holidays underway, now is a good time to look at sterling strength, noting that we should look further than euro weakness for explanations.
GBP could strengthen a further 5-6%
Starting with the Bank of England Trade Weighted GBP Index, Elliott begins by noting the massive 27% decline in pound strength in 2007 and how we are now approaching the 61% Fibonacci retracement point against a basket of nominated currencies. She adds that she can foresee a further 5-6% more strengthening before exporters start to complain about GBP strength affecting sales.
JPY stuck in secular bear market
Looking to GBP/NOK, Elliott adds that this is a good time to visit Norway for Brits, with the pound trading very close to 13 krone, at the top end of a long term price range. Pivoting east for her final slide, Elliott took us to Japan, noting that Abe has done a fantastic job in trashing Yen strength, but that JPY in still in the midst of a long term secular bear market.