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U.K Economy Going Lower

Written by A Forex View From Afar on Thursday, July 10, 2008

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The Bank of England faces a pretty hard situation: a stalling economy and a high degree of inflation. More and more economic releases point out a major slowdown, if not contraction, is coming.

House prices fell the most since 1993, consumer confidence hit an 18-year low, while the service, manufacturing and especially the construction parts of the economy are contracting at an increasing speed. The only indicator that is holding tight is retail sales, which easily beat estimates, but now everyone expects a major revision from it. All of this points to the UK central bank iprobably following the Fed’s footsteps in the next months.

A cut may be on the table and will probably start to be seen soon in the pound’s market valuation. Who knows, maybe the BoE will even open its own “mergers and acquisitions” department, as the Fed did. This may be the ultimate sell the rumor, and buy the news, of a U.K. rate cut.

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Fundies and Trading
There is a constant question from some traders as to why anybody would ever need to consider the ‘F’ word when trading. Fundamentals: what is so damaging at looking at both Technical charts and having a Fundamental filter to gauge how many Lots to put on? Why is it that accepting that Technicals give us price points to trade, but Fundamentals determine the direction that we travel is so difficult for some traders to accept? Without a Fundamental Filter very few pure Technical traders would have seen this Dollar move coming today.

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