4 Reasons Why the British Pound is set to Soar Again!

Today, I want to share with you, four crucial reasons why I believe that the British pound is about to soar once again vs. the U.S. dollar.

Even though the pound (GBP) has been stuck in a range bound pattern for a month and a half now, things are about to change.

Here's why:

1.      The U.K. "unemployment claims" figures have been headed down ever since the huge spike up in March. In fact, the latest numbers came out this morning. What did it show? There was a positive revision (improvement) in the previous month's unemployment numbers to 30.8K. The latest numbers were expected to come in at 41.4K but ended up coming in at a much lower 23.8K. Lower unemployment claims is a bullish sign for their economy and therefore, for their currency as well.

2.      The U.S. Dollar Index continues to fall. While the dollar index has been in a downtrend ever since early March...it's been consolidating sideways for about a month and a half now. Some speculated that it would turn back upward. However, I felt that due to the poor fundamentals, excessive money printing, Obama's policies and higher unemployment than much of the world, that the technical trend would therefore continue. Yesterday and today, the index has decisively broken lower yet again, helping the GBP/USD to bolt higher.

3.      The inflation in the U.K. is still at 1.8% on a year over year basis, while many countries out there have "negative inflation" aka "deflation". So with the U.S. having -1.3% inflation and the U.K. having +1.8% inflation, my bets are for the pound to appreciate over that of the U.S. dollar, since inflation spurs eventual rate hikes, which spurs investment in a currency with a growing interest rate yield.

4.      Stocks have gotten a recent boost in the last few days as a notable improvement in corporate earnings has fueled a better sentiment and higher stock prices. When investors are willing to take upon the risk to buy stocks, they also load up on more aggressive currencies too, such as the GBP.

So it's no wonder that the pound hit bottom in the February/March area on the charts and has headed up overall since as unemployment improved and stocks stabilized while the dollar broadly turned lower and U.K. inflation remained notably much higher than most other currencies, particularly the dollar!

This is why we have an uptrend on the GBP/USD daily, one year chart. The four reasons that I give above cannot be ignored and are not "fleeting" points but are points that will continue to impact the pound for months to come. So if your analysis agrees with mine, then buy the GBP/USD!