Sterling turns the tables

Sterling’s run sees almost 700 points added against the dollar over the last two weeks.

GBP/USD
Source: Bloomberg

GBP/USD goes from strength to strength
Now that GBP/USD has traded as high as $1.5261 and broken moving averages on the way, the question on currency traders’ minds is ‘are we witnessing a healthy bounce in an otherwise bearish market, or has a corner been turned?’

Considering we are now just over a week away from a UK general election, where it’s widely perceived that we will not have a majority and – at present – unlikely a coalition government, we are set for a period of volatility and uncertainty. The backdrop to sterling at the moment is that GBP/USD has risen by 700 points in a little over two weeks. This has moved the currency into overbought territory on the relative strength index and this would make me more inclined to hunt for an opportunity to sell rather than buy.

With the timeline ticking towards the UK election, a cautious approach should be kept when looking at stops as intraday spikes could well materialise.

EUR/USD continues to climb
Having finally heard the growing negative commentary surrounding Yanis Varoufakis’ sometimes less than delicate political touch, the Greek government have decided to let the latest round of negotiations take place without his presence. As one Twitter account pointed out, this looks remarkably like a vote of no confidence (in football parlance) and as normally happens when the chairman makes these comments a firing is not too far behind.

The last two weeks have seen EUR/USD gradually meander its way back up to the top end of its recent range and looks set to once again approach the $1.1000 level. Whether it has enough energy or inclination to break through a level it has twice failed at is more debatable. Institutional opinion is still calling for breaks below parity over the next six to twelve months and the selling pressure could well return sooner rather than later. 

Panel Title

EUR/USD

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by analysts

Find out more about