It's a boy!

Markets seemed more interested with what is going on with the new British heir to the throne than price action. One website said the new boys fortune will be one of "extreme ups and downs". That sounds more like the fate of cable.

I know we wanted to punt cable to the short side but we also wanted to flip our view to bullish should 1.5310 give way. Which it did and we managed to catch onto a nice rally to the 1.54 handle. We think this can go higher still. Why? Because of gold.

And also because of inflation expectations which are trading higher by the day. This is optimism at its best. The Fed is tapering and stopping printing machines (effectively), yet the economy is able to inflate its debt away. The Fed needn't be involved. At least for now. And thus, even gold has rallied given the inflation hedge that it is. On gold, we continue to think that either a long term base is in, or we are very close to one. 5 years later we will likely be kicking ourselves as to why we did not buy this in our personal accounts if we haven't already done so.

But this is more about the pound and inflation expectations. GBP/USD and Treasury Inflation Protected Securities have been correlated for months and as these TIPS increase in value, so will GBP/USD. Particularly given the country's irritating history of high inflation. Even in future kings to come, inflation is likely to remain a mainstay for the UK.

Gold recovering: