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Pound looks technically weak
Published on 06.09.2017 15:41

The British pound has continued its winning streak today after breaking through the $1.30 mark in yesterday’s trading but some analysts warn it may be a dead cat bounce and a reversal of trend may be on the way.

Steve Barrow, head of G10 strategy at Standard Bank, has joined a number of analysts by predicting that the pound will fail to shed the stigma surrounding Brexit, which he believes will be a long and painful process, and will ultimately cause problems for the British currency .

“The real problem for the pound is that Brexit is more of a marathon than a sprint,” Mr Barrow said.

“So while there might be the odd occasion when the pound ‘wins’ a sprint on citizens’ rights, or some other issue, the outcome of the whole race has probably been determined already.” He added.

From a Technical point of view the pound is also looking vulnerable having made a lower bottom towards the end of April compared to the end of September and it looks as if there is a double top forming with the first top being the start of August.

The pound will run into significant pressure at the $1.31 mark which will form the second and lower part of the double top and may also be the cause of the pound’s trend reversal

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Andrew Masters

Analyst

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