Serious Problems Ahead For The British Pound Sterling, Analyst Says

James Turk writes Serious Problems Ahead For The British Pound: Last week the British, FXB, pound fell 3.0% against the US dollar. Some say it was because of UK bank exposure to Spain, which Moody’s warned could be downgraded. Others blamed the UK’s close economic link and heavy debt exposure to Ireland, which Moody’s did actually downgrade last week by 5-levels to Baa1. This low grade is barely above junk status. These downgrades in different corners of Europe no doubt had some impact on Sterling’s weakness, but there is I think another factor closer to home.  It is the growing awareness of the runaway spending and borrowing by the British government. Despite all the rhetoric and promised cuts in spending by the newly elected coalition, the hard fact is that government spending and borrowing continue to soar – and look as if they are spiraling out of control (as can is highlighted in the chart entitled UK Tax Receipts Tumble As Outlays And Debt Soar).

The chart of the British Pound Sterling, FXB, shows that it is in an Elliott Wave 3 of 3 Down. And the chart of The United Kingdom, EWU, shows that today it has fallen lower in an Elliott Wave 3 Down.

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