Over 40 years’ heritage
185,800 clients worldwide
Over 15,000 markets

Forex snapshot

The pound is under pressure versus the US dollar and traders remain nervous as we enter the final stretch before referendum day.

Pound and dollar currency
Source: Bloomberg

The euro has started the week on the wrong foot while the dollar’s strength continues as Wednesday’s Federal Reserve meeting is in focus.

Sterling down as Scotland’s decides

The pound is trading at $1.6238, down 0.15% as the clock ticks towards the big decision on Thursday 18 September. The ‘No’ vote remains ahead in the polls but the margin is too close to call and the bias reminds on the downside. As Alastair McCaig stated, the pound has moved out of oversold territory but we have yet to see conviction buying. Today is a quiet day in terms of UK economic data and the focus will remain on Scotland.

The pound is yet to close the gap up to $1.6326 and support is coming in at $1.6191. If the referendum keeps moving in the direction of the ‘No’ vote it could target $1.6326, but a late resurgence in the ‘Yes’ campaign could push sterling to $1.6059.

GBP/USD chart

Euro could drop further

The euro is trading at $1.2931, down 0.25% on the morning’s session. As the euro shows no sign of recovering from the interest rate cut by the European Central Bank at the beginning of the month, it continues to be rangebound. As Alastair McCaig stated, traders are still worried they could see a flare up in tensions between Russia and the EU; this has given traders little reason to buy the euro.

The next wave of euro selling could be triggered by the Federal Reserve meeting on Wednesday at 7pm (London time). The US dollar basket has made gains for nine consecutive weeks, and traders are hoping to find out when the Fed will raise rates. Any indication that it could be shortly after QE ends could drive the euro to $1.2883. The euro is encountering resistance at $1.2966.

EUR/USD chart

The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.

Find articles by analysts