Gavyn Davies writes on BOE governor Mervyn King’s UK economic policy speech on Tuesday in FT Blogs:
The governor gives an extremely broad hint that he would like sterling to be much lower against other currencies. In his view, the drop of 25 per cent in sterling, which happened between late 2007 and the beginning of 2009, was “certainly necessary” for a full rebalancing of the UK economy.
If we take a look at the long-term view, sterling is ranging in a narrow band against the greenback after a sharp fall in 2008. 63-day Twiggs Momentum oscillating close to the zero line (within 5%) is typical of a ranging market.
Completion of a double top on the weekly chart signals a down-swing to primary support at $1.53*. 63-day Twiggs Momentum below zero strengthens the signal.
* Target calculation: 1.58 – ( 1.63 – 1.58 ) = 1.53