Sterling turns the tables

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

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. 

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