The British pound, which was above $2.00 just six months ago, crashed to a new low Tuesday and may be starting another leg down.

  • Reports that the Bank of England would have to rescue the Royal Bank of Scotland with another $41 billion bailout sent confidence in the British financial system and the British pound plummeting.
  • The whole global banking sector continues to be caught in a downward spiral, eroding values of currencies vs. the U.S. dollar.
  • VantagePoint’s medium-term term moving average crossover signal spotted the latest decline several days ago, positioning short traders for the 500-point collapse Tuesday, and the neural index reading of 0.00 adds to the bearish clues.
  • Previous VantagePoint medium-term moving average crossovers produced a profit on a 100,000 lot short position of nearly $20,000 from late July to mid-September and another profit of about $29,000 for a short position from early October to late November, according to VantagePoint’s Opportunity Calendar (gold line on chart).

Source: VantagePoint Intermarket Analysis Software

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