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
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this broker. Before deciding to trade foreign exchange you should consider whether you understand how CFDs work, your investment objectives, your level of experience and readiness of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|