In association with

Market Bulletin 11th March 2010

Euro Sterling is set to go further

The Technical Trader’s view:
Euro-UK Pound Sterling 1.01
1.00 MONTHLY CHART
0.99
0.98
0.97
0.96
The compelling force
0.95
0.94
0.93
behind the weakening of
0.92
0.91
0.90
0.89
Sterling since 2007 has
0.88
0.87
0.86
been the completion of this
0.85
0.84
0.83
massive Head and
0.82
0.81
0.80 Shoulders Reversal.
0.79
0.78
0.77
0.76
0.75
0.74
0.73
The measured minimum
0.72
0.71
0.70 move was up as far as
0.69
0.68
0.67
0.66
0.89.
0.65
0.64
0.63
0.62
0.61
0.60 And there the market
0.59
0.58
0.57
0.56
consolidated – it looks like
0.55
0.54 a Triangle… look closer.
1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Euro-UK Pound Sterling

1.05
1.04
1.03
1.02
WEEKLY CHART
1.01
1.00
0.9802
0.99
0.98
0.97
0.96
Were the market to break
0.95
0.94
0.93
the upper boundary of
0.92
0.91
0.90
the Triangle, a
0.89
0.88
0.87
continuation pattern, the
0.8185 High
0.86
0.85 market would receive a
0.84

huge bull impetus.

0.8099 High
0.83
0.82
0.81
0.80
0.79
0.78
0.77
0.76
The minimum move? Up
0.75
0.74
0.73
as far as 1.04 or so.
0.72
0.71
0.70
0.69
0.68
0.67
Might that happen?
0.66
0.65

May Jun Jul Aug Sep Oct Nov Dec 2008 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2009 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Feb Mar Apr May

SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.
 In association with
Euro-UK Pound Sterling
0.9409 High 0.945

100.0%
0.940 DAILY CHART
0.935

Falling diagonal of the Triangle 0.930

0.925 There is a clear bull falling

0.920

0.915
wedge which has completed.
61.8% 0.910
0.9053 High
0.905

0.900
The market has shot ahead as
0.8838 High
0.895 far as the 61.8% Fibonacci
0.890

0.885
retracement resistance -
0.880 that may continue to offer
0.875

0.870
resistance.
0.865

0.0% 0.860

0.855
But the influence of the falling
0.850 wedge suggests still higher
0.845

10 17 24 31 7 14 21 28 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 1 8 15 22 1 8 15 22
levels – and a test of the
August Septem ber October November Decem ber 2010 February March
diagonal at 0.920.

If that were to break then a

massive fresh injection of bull
energy for the Euro would drive
the Pound lower still towards
that 1.04 target.

The Macro Trader’s view:

The Euro has recently suffered a very pronounced period of weakness against both the US
Dollar and the Japanese Yen but against Sterling it has remained strong throughout. Why is
that?

First, let’s look at why the Euro came under such intense selling pressure. The main reason
has been the well-publicized Greek Debt crisis, which also included Spain and Portugal but
took less attention than events in Greece.

The main reason for Greece being in the spotlight was it was found to have lied about is public
finances over a period of time with the express intention of gaining entry to the Euro. So
although other peripheral Euro zone members have public finances in a similar sorry state, the

SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.
 In association with
markets picked on Greece because there was no confidence that even after the lies were
admitted the data was believable.

Leading from this came the fear, which spread throughout markets, that a major economy
might default on its Sovereign debt. Apart from Greece et al, the US and UK are running
similarly large deficits and this too alarmed traders.

Fears receded after Greece agreed to take tough measures to improve its fiscal position with
the EU/Euro zone pledging unspecified help. More recently, a European version of the IMF has
been proposed, dubbed the “EMF” to deal with any future crisis. But the German leader has
warned that Treaty amendments will be required to bring such an institution into being and the
Bundesbank president has come out strongly against it.

That’s the story behind the Euro’s weakness, so one needs to look at the UK to see why
Sterling alone failed to benefit from the Euro’s recent woes.

It is well documented that the UK economy was later to emerge from recession when
compared to other G7 economies. Moreover the UK finances although not materially worse
than others, has deteriorated much faster than other G7 economies. And with an election
looming and the Government looking unpopular, Prime Minister Brown is reluctant to begin an
orderly withdrawal of the stimulus.

His finance minister has set out a timetable to halve the deficit over 4 years, but the route looks
unconvincing, making the pledge look less like a commitment than an aspiration. Indeed,
despite apparently intending to cut the deficit, Brown keeps on trotting out more plans requiring
additional public spending.

Add in the means so far put forward for bridging the Spend/Borrow gap; higher taxation, with
the introduction of a new 50p band that has made many high earners think again about
working in the UK and the landscape post election should Labour remain in office starts to look
unfriendly towards business, or anyone that creates wealth either for themselves and the
economy generally.

SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.
 In association with
The rating agencies are unhappy with the current policy mix and periodically warn public
finances must improve for the UK to keep its AAA credit rating, loss of which would force up
the cost of funding the now large national debt.

So to recap Sterling’s position:

- Recovery underway, but Prime Minister and Central Bank warn it will likely be weak,
- Stimulus in place with no credible route for removing it,
- Political stalemate pointing to a hung Parliament with no party winning an overall
majority,
- Likely outcome; difficult to gain agreement on sorting out the fiscal mess and how best
to achieve it.

And recent data hasn’t helped. This week has seen a terrible set of trade figures. Usually a
weak currency over a prolonged period corrects a large trade deficit. Not so in the UK, which
means manufacturing is too weak and too small to satisfy even current reduced demand. This
was confirmed again this week by a very disappointing set of industrial production and
manufacturing output releases which bode badly for Q1 GDP due middle of next month.

So why has Sterling performed so poorly against the Euro despite all of the Euro’s ills? It is
because the UK economy is weak by comparison and a political deadlock looks set to emerge
after the May/June elections meaning little hope of any meaningful improvement.

The Pound looks weak.

Mark Sturdy
John Lewis
Seven Days Ahead

SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets

Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.