Although I am moderately pleased with the outcome of the
forecast for 2016 ( particularly the impact on Sterling in July), I did feel
that the sterling forecast for the whole 2013-26 period was somewhat hampered
by the lack of a specific sterling chart. The Bank of England chart works, but
it is sometimes difficult to separate the currency issues from the operational
ones. Nevertheless we will continue to work with what we have. And if we are correct we will be living in
very interesting times Sterling wise by 2020.
2017
Although there is a lack of certainty in January and
February, some of the pressure of 2016 has lifted ( albeit temporarily) and the
currency should be ok.
March and April are more mixed. On the one hand we have some
evidence that the economy is benefiting people, but there are also some
underlying disruptive forces that are putting sterling at the forefront of
global debate.
There is a hint of some difficult things to come
May through to July is again mixed but the themes are rather
different. There are short term leadership difficulties and the public are
confused by the fact that things seem economically stable but there may be
interest rises or there may be some bad stats.
August to September sees the first step of a transition that
will last more than 3 years as things
become more focussed on fundamentals.
Still, the balance of these 2 months is positive.
October and November see a return to tricky conditions.
There may be significant volatility and possible rate changes. Efforts ae in place
to manage inflation.
December sees the volatility ongoing. There is
misinformation and confusion over exchange rates ( particularly with the Euro).
December represents a key turning point in the currency
cycle, but I don’t see increased values
against most other currencies
Trade trade trade in sterling , this dominates 2018.
2017 disruptive effects continue in January and February
2018.
It is a challenging time for the Bank of England and the
currency value as there is a sell off.
March and April are quieter but maybe inflationary.
There is confusion over the direction of policy.
May is phase II of the long term changes. It looks to be
mixed month.
June to August are more eventful. We see the end of a cycle
that started in 1979, and another from 1989. It appears to be quite a difficult
one for Sterling investors and the UK population as a whole.
There are challenges to the whole central bank.
But it is September and October when things really take off.
A series of events ( many though not all unfortunate) is challenging the value
of the currency, the governing of it and putting pressure on the population and
Sterling investors.
I would expect the currency to suffer trend-wise but within
that is a lot of uncertainty and volatility
November is a bit less dramatic, although underlying issues
remain, and the Bank Govenor has a lot on his hands.
Trade volumes may continue to be high but the trend is now
less obvious as it is more about finding a value within a range.
After all that, December is relatively quiet
2019
January and February 2019 open with some conflict between
the needs of the country and the logical policy for the currency.
Expect more instability, perhaps a focus on rates but no
substantive further value changes
In March to June, there are inflationary pressures as well
as rate issues again. Volatility is supressed as no-one is sure what is
happening next
Influences shaking up the foundations may be external ones (
from other countries) but they are nevertheless creating a challenging trading
environment. Expect some radical policy
decisions.
July and August are calmer, although there continue to be
severe economic challenges for Sterling holders. Phase III of the changes
begins
September to November sees transformation in the nature of
the hard currency as well as new policy on interest rates. Conditions for the
currency remain rather tough, although the BOE Governor is better positioned
than previously ( new Governor maybe?).
There have been worse periods over the 4 years though, so I
doubt this one has any special trend in sterling value.
December sees a culmination of events, and the beginning of
phase IV as another key cyclical turning point is reached. In this case events
will tend to magnify the impact of earlier events and trends.
I expect a great deal of currency trade this month, but at
this point am less sure of the direction.
So 2020 starts as 2019 ended. But now the pressure is really
on. There are long
term policy changes relating to the currency in the works.
The aim to stabilise the economic positon and control price inflation.
February and March see more of the same trends, but this
time there is less restriction and more focus on debt matters. Raising new debt
might be quite hard over this whole 2 year (2019-20) period.
April to June sees no let up. Debt is the key focus for the
people and as a result there are both policies to manage the currency and
instead of the vast amounts of trade the characterised earlier months, now we
see restrictions.
Then comes a long period from July to November when we move
to Phase V.
Investors are still trying to trade the currency, ( there
seem to be less restrictions than in the early part of the year) but there is a
problem finding the intrinsic value.
Rate changes to manage the debt don’t really help though they are well
publicised.
By December we start to see what the new environment will
look like.
There may be a lot of Sterling buying now as the situation
becomes clearer. Nevertheless the circumstances remain difficult and there are
further challenges to come.
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