To raise Fed Funds and Inflation against a high balance sheet and promises to reinvest proceeds ensures GDP? forever low and to go nowhere. Raise Fed Funds and Inflation at current levels still promises low GDP. Currency pairs arranged as USD/Other pair are currently far to high. If USD rises further based on a Fed Funds raise will send USD to exorbitant high levels and Other Pair / USD to exorbitant lows.
GBP’s Sonia for example is already massively oversold and it counters the massive overbought in Fed Funds. Sonia and Gilt Repos are currently trading at lifetime lows while GBP/USD trades at 40? year lows. Yellen’s risks are far to high to raise and the risk is to send EUR, GBP, AUD and NZD much higher.
Yellen’s confirmation vote January 6, 2014 was 56 Yeas V 26 No’s as 45 Democrats and members of the Roman army voted Yea in lockstep V 11 Republicans. The overall vote was 56 Yeas V 26 No with 18 non voters. Yellen’s confirmation was easy as Democrats controlled the Senate. Now we stand 2 years later to watch Yellen thread the needle to insert the square inside the circle. Bernanke in 2010 was a 70 V 30 vote for confirmation as 47 Democrats voted Yea. Keynes was then resurrected.
GBP/USD for the week range, we’re currently looking at 1.2418 to 1.2149 inside 269 pips. The range from 1.2383 to 1.2183 is off because USD yields are off kilter by roughly 30 basis points.
What 1.2149 means is this point was set just above range break points at 1.2146, 1.2142 and 1.2134. This area at 1.2100’s in the coming week will act as strong buy dip supports. Bottoms today are found from 1.2220 to 1.2206. GBP overall is oversold and will struggle today to see bottoms.
Above range breaks are located at 1.2420’s and a few pips below 1.2418. We looking at falling lines at 1.2327, 1.2340 and 1.2397. The area from 1.2330 to 1.2390 contains a wide area currently so the drivers for the week will be 1.2327 and 1.2340. Lower GB/USD must then hold below.