For the past six years, and a total of 72 monthly candles, the pound has held above US$1.475, bar briefly in May and June 2010. Likewise, it has always traded below US$1.70, except fleetingly in June and July last year. In other words, an important trading band has been established and we believe it will hold again this year. The so-called superior US economic recovery is not so clear when compared to dynamics in Britain. Nor are rate rises in either country, despite having been threatened with for years now. In fact, government bond yields are perilously close to their record lows in 2012. Watch out for basing activity around the psychological US$1.50 level.
