CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
Established in 1974
Over 185,000 clients worldwide
15,000 markets worldwide

Sterling blushes on inflation concerns

After weeks of free fall, the euro has finally started regaining some traction against the sterling.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
Sterling
Source: Bloomberg

Just this year, EUR/GBP slipped from around £0.8000 all the way down to within touching distance of £0.7000. This £0.7000 level has since provided some support and we’ve actually seen a bit of a bounce off it.

The euro has seen a bit of an upturn recently, supported by the ECB’s asset purchase programme, which showed a wider-than-expected spectrum on the asset side. A much less aggressive and more cautious Mark Carney has contributed to the recent bout of weakness in the sterling. Carney warned inflation is likely to sink further in coming months and that saw the sterling take something of a hit.

Taking a closer look at the price action, there is downtrend resistance that had been in place since January and has been capping prices over the past couple of months. The pair closed right on this line and it’ll be interesting to see if it can sustain gains in the near term.

The 23.6% retracement of the January-to-March fall comes in at £0.7249 and that’s the next key level to look out for. If this recovery doesn’t have legs, I suspect sellers will come in around that £0.7249 region.

Click to enlarge

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.