In fact, the sterling is one of the few currencies that the greenback is struggling to gain ground against. The resounding victory for the Conservatives has been the pinnacle of the rally and, to a large extent, the removal of the pre-election uncertainty has also played a big role.
The relationship between the UK and Europe will be the next topic of discussion and could be a fresh source of volatility for the sterling. After being sidelined for most of yesterday’s Asian trade, cable finally managed to nudge through $1.5500 and went on to print a high of $1.5613, which was its highest since December last year.
There is a nice uptrend in the pair that’s been in place since April when the pair bottomed in the $1.4600 region. This has supported prices over the past few weeks and remains in play at the moment.
While the pair is just popping into overbought territory, I believe the momentum is enough to keep the pair going. Having said this, it will likely encounter some resistance in the $1.5600 region as this was a major consolidation zone through November and December.