Journey of GBP in 2024
Much of 2024 saw GBP emerge as the second-best performing currency after USD. The UK’s economic growth was robust, outpacing the EU’s performance, and the British pound benefited significantly from its carry trade advantage. As a trader, I found this environment highly conducive for shorting EURGBP during upward spikes, consistently generating decent profits.
Shorting EURGBP also served as my strategy to remain bearish on the Euro. Compared to other currency pairs, EURGBP is less volatile, allowing me to manage risk with more confidence. Even when the market moved temporarily against my position, I felt assured and patient, waiting for it to turn in my favour.
I checked my trading history I was 100% profitable with shorting EURGP positions in 2024.
The Turning Point
I have always believed that macroeconomic trends persist for months or even years until disrupted by significant events. Such turning points often stem from geopolitical shifts, fiscal policy changes, natural disasters, or pandemics. Until such events occur, trends may have ups and downs but rarely reverse dramatically.
In October 2024, I became highly sceptical of the Autumn budget announced by Rachel Reeves. In hindsight, I’m glad I trusted my instincts. While I am not an economist, the budget appeared to signal a critical turning point. Increased government borrowing and higher taxes rarely bode well for economies. Historically, markets and investors react negatively to such measures, leading to a decline in business confidence and sentiment.
As this turning point unfolded, I adapted my strategy. Instead of shorting EURGBP, I shifted to shorting EURUSD as a way to stay bearish on the Euro. I also began considering shorting GBPUSD on upward spikes. While I don’t typically day trade, this approach aligned with my broader strategy. However, I remain hesitant about swing trading GBPUSD, as I prefer to avoid paying swap fees when holding positions for multiple days.
Conclusion
The purpose of this reflection is not to critique the Autumn budget—my intent is purely analytical, focusing on its implications for GBP’s performance. Based on current conditions, I believe it is not an ideal time to go long on GBP. Unless the government implements significant changes to counteract the budget’s impact, the outlook for GBP appears challenging. For now, staying nimble and focusing on shorting GBPUSD and EURUSD on upward spikes seems to be the prudent course of action.
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