Pound to rally in April
Published on 28.03.2018 16:04

The British pound is under further pressure today, following on from yesterday’s losses which was sparked by a round of technical selling once the currency hit $1.4250.

But if history is anything to go by, the pound should start to rally as we head into next month like it has done for more than a decade albeit with different growth rates.

"Within the G10 FX complex, there is no stronger seasonality than in GBP through April, it has rallied every single year for the past 14 years." says Kamal Sharma, FX Strategist with Bank of America Merrill Lynch Global Research in London.

Even the uncertainties surrounding Brexit may not be enough to break the pound’s predicted rise

"April seasonality is approaching again for GBP, which tends to rally no matter what the political/macro backdrop” Sharma added.

The pound may receive further support after rumors that a deal is about to be announced by the British government regarding the border between Northern Ireland and Ireland.

The government is expected to announce that they have found a solution which will avoid a hard border between the 2 countries which will remove one of the biggest hurdles regarding Brexit negotiations.

“On the Brexit negotiations a lot of the good news is already discounted but the possible Irish border proposal edged sterling higher. I think we will need further positive news to move it above the $1.42 area,” said Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets.

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Andrew Masters

Analyst

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