So, how did my prediction on the pound do?

A year ago, I read an article in the Independent with the headline “Pound sterling slump: The key moments in six charts – and how low it could drop”, with the dire prediction:

Most economists expect the pressure on the pound to get worse, increasing the volatility across the broader market

At the time, the pound was at $1.24 against the dollar. Brexit, innit.

I had this to say about the sky falling:

Personally, I think Sterling will bottom shortly … on the basis that:

  1. it’s at a 35 year low
  2. the majority of economists expect the pressure on Sterling to continue.

I work on the simple premise that economists basically have no idea what they are talking about, so when they say things like “and it can only get worse”, you have a big contrarian indicator.

They say that nobody rings a bell at market bottoms … but, well, sometimes they kinda do … and the people ringing the bells are politicians, economists and experts. They may not necessarily sound like bells, but they are bells nevertheless.

So here’s the crunch question: did I call it right?

Well, GBP/USD is now $1.39, up from $1.24. So the answer is “yes”.

And how much money did I make on this brilliant insight of mine? Why, the same amount of money I made on the realisation that when Gordon Brown was selling off our gold, the gold market was likely at a bottom, of course. Which is to say, I made no money at all. C’est la vie.

I was right, though: politicians, economists, experts and alarmist headlines are often good contrarian indicators.

Stay safe out there.





About mcturra2000

Computer programmer living in Scotland.
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