 Good morning or good morning. So I just was looking through some of the news data And I posted this earlier with regards to the pound and it says here that Europe's biggest asset manager in fact Let me just Make sure that I can make this a bit bigger, right? So it says here that Europe's biggest asset manager is Shorting the pound on the conviction that the Bank of England will start cutting rates in the first half of 2024 so Pretty much they are definitely, you know bearish for Various reasons to definitely have a read of this and they think that prices could actually go back down to the To the 120s and Basically the the summary really of this is that The pound has to be revalued. Yeah, so over the past week or since FOMC, we've had a situation where the Pen tool and We've had a situation where we've had a dovish A dovish fit. Yeah and the reason being is because Of you know inflation is is coming, you know down to their 2% target Right The economy right is doing actually pretty pretty well with the best Out of you know when you think about Europe and you think about the UK and even Japan in fact It's best in you know in the currencies that we trade Which is for me is a bit surprising that they would do they would be actually be quite dovish But as I've kind of spoken about in the group Is that they are cutting rates really I think because The there's an election cycle right coming up and although the Fed Not necessarily political I do think that there is probably pressure on them from the Biden administration to To cut rates so that you know things look better And the economy starts to grow into the election cycle because you're Cutting borrowing and lending costs right and so I have no doubt that the Federal Reserve will cut rates All right, but in isolation and when I say isolation if you're just solely looking at the The Federal Reserve and what they're doing and and you know In terms of rates then you know a lot of traders would say oh well we're bearish on the dollar But now we've had the situation where inflation has come out for the for the UK and It was came down more than expected which is basically fueling Rate cut bets and remember there is the leading and lagging Effect in terms of rate cuts. It's all about who is the first to cut rates and the The central bank that is first to cut rates is the one you should really kind of short and the central banks that are Delaying their cuts or the last to cut should be the ones that you are really buying In effect of course there are you know nuances to that but that's the general thing so You know when when FOMC came out And the Fed were dovish and everyone's pricing in cuts at the time the Bank of England was still hawkish right because their inflation data hadn't come out now their inflation data has come out And it's come out you know worse than expected that's it worse than expected better than expected in terms of the economy But in terms of price appreciation and devaluation it means that the The pounds should devalue because if inflation is coming down to their 2% target Yeah It means that the the bank are likely to start to enter into their rate cutting cycle sooner Yeah, because if it stays you know well well above or it's not seen as coming down anytime soon then Central banks will tend to either hold or potentially hike if they feel they can get away with hiking and the economy can take Rates but now the inflation is decelerating disinflation coming into the market more than expected The market is now pricing in new rate cuts in the you know the first half of the year Whereas you know before the inflation data it was probably more second half of the year They were seen as being the most one of the most hawkish central banks or out of at least the The Federal Reserve the European Central Bank and the Bank of England was seen as you know the one of the last to start Cutting rates so what does that mean? Overall so I believe that there is an opportunity to short the pound dollar right pound dollar Because the I think the market has been caught offside in terms of the pound valuation And so although you have a situation where the pound and sorry the dollar was was was weak right When you and you know and the pound was was holding up now that situation has changed Now you have a situation where both currencies are are weak And so when you have both currencies are in a position where they're both cutting then it starts to become What are the differences in terms of why would you really want to buy the the dollar over the the pound Now one of the obviously reasons is who's cutting first a major reason as to why also as well the The dollar may strengthen over the pound is the fact that their economies are doing you know Different stages right the pound basically flat on the day in terms of growth and the The US economy is something like I think like 5.2% or something they're they're about right 5.2% Recent data actually month for month data for the UK came in at zero minus 0.3% something like that So it's not looking good stagnating economy Not doing good at all. So I believe as much as I am Bearish on the dollar against some currencies right so for example the Australian dollar I would buy the Australian dollar Against the US dollar The Japanese yen for example I would buy against the US dollar Yeah, and I hope that obviously with the Japanese yen That the Bank of Japan are looking to high crates next year Yeah, so that makes sense one is cutting one is hiking you buy the yen over the dollar But in a situation where you've got the pound dollar It's basically who's the worst of the worst or who's the best of the worst And that these two in a straight fight Considering GDP and where they are And now that the market has to also revalue the pound I think they're going to revalue the pound lower against the dollar the dollars the pound dollars recent You know move to the upside was based off of and you know in on a price chart was really kind of based off of the The pound holding rates for a lot longer. So you saw on the on the pound dollar You know prices pretty much going to the upside now that has changed to the To now rate cuts being priced in so now I think we were at the ceiling was like 128 right 128 One dollar 28 yeah now that is looking like the ceiling because I think now that the the the pound has to be revalued against the dollar a lot lower So on the pound dollar there are there is a chance. Yeah, and that's what basically The Europe's biggest asset manager is basically saying in this article Yeah, it's saying that the pound should actually want to start to fall against you know paying for the pound And so if you scroll up and you know even more you can start to see Here I posted this and this was from the Guardian blog talking about investors bet and Bank of England interest rate cuts early next year Yes, and we've got that going on We've got Goldman Sachs brings forward Bank of England rate cut to May from June previously Again the shifting sands continue to play out in central banks rate cut pricing first Bank of England cut now priced in for May next year And again, you know we go up you know inflation metrics worry in the Bank of England starting to ease so inflation coming down Means more rate you know rate cuts are potentially you know coming sooner Biggest downside shock since 2021 and scroll up as well and again we see here financial markets pricing first rate cut as soon as March And again talking about the UK inflation surprises but I was trying to scroll up just to see about the economy right So again bond fund giant Pemco warns of hard landing for the UK economy and if they again this starts to happen This gives more incentive for the bank actually to start to cut rates because if there's a hard landing meaning you know some sort of recession Recession fears then to boost the economy you need to basically cut rates and if they have inflation coming down it gives them leeway to do that So I believe that although we had a long talk about the you know being being bearish on the dollar for 2024 I think you know in the first half of the year or at least the first few months against the pound I think the dollar should actually appreciate also as well There is I think oh that was it now yeah it was here you know seasonals favor stronger euro into year end yeah But if you look here right what you'll see is that the the euro tends to be negative you know in the first eight weeks of the year And now you know what's what's your what to do with the pound and the dollar but if the pound the euro and the dollar tend to work inversely right So you know euro dollar tends to outperform right euro down dollar goes up yeah and appreciates in the in the in the in the first eight weeks of the year Then you know the logic should follow that if the pound you know replaced that with the pound GBP and I'm not saying that the data is going to be you know the same is going to be different But when you when you take into account everything we spoken about in terms of the pound having to be revalued the dollar typically strengthening you know in the first eight weeks two months of the year I think that kind of adds up to some at least some dollar strength coming into at least the first two months of the year before again going into March April And then the the the Fed potentially ramping up rate cut rhetoric so of course this is all dependent upon data nobody knows but again if we're wrong about the data that comes out and no one's going to be right 100% No one can forecast exactly what's going to happen but this is the trade idea and I think that as long as the data supports this narrative then I think in fact the pound the pound dollar is going to be a decent trade idea going into 2024 all right guys take care speak soon and again wish you all a merry merry Christmas