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Risk Aversion in Full Force As Pound Hits All Time Lows Vs Yen

Last updated 1/20/2009 3:36 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Pound liquidation continued unabated for the second day in a row , as traders absorbed the details of the UK rescue plan and grappled with the massive losses posted by RBS. Many of the market participants are coming to a creeping realization that   the UK banking sector may have to be nationalized as a result of the recent events.   

The markets have already driven the equity prices in the three remaining publicly traded Irish Banks towards zero after Ango Irish was nationalized and the fear amongst currency traders is that UK banks may soon follow the same fate.

Needless to say the FX market reception to Mr. Brown's plan has been less than welcoming with the unit hitting all time lows against the yen near the 127.00 level as risk aversion reigns for the moment. Cable continues to deprecate in response to the massive increase in government spending.

At present 1.4000 remains the key support level in sterling, not hit since 2001. However with flow remaining heavily negative that level is likely to be tested  and broken before today's trading session ends.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.