Never did I imagine Sterling would have performed so well at the beginning of 2018. Given the trepidation over Brexit negotiations, the outlook certainly had a negative connotation to it. In reality, GBPUSD has moved to a recent high of 1.3824 and is at the highest point since the vote to leave the EU – up from 1.34 since the 1st of January. But is the move higher due to positive negotiations with the EU or something else? In fact, the latter is true. There has been no new positive information on Brexit, but across the board there has been a consistent and notably weaker US dollar.
Indeed, the greenback has lost 2% this year, following on from a 10% decline in 2017: certainly perplexing when you consider the rate hike cycle the US Federal Reserve is employing at the moment as this would normally lead to a stronger US dollar. In regard to GBPUSD, the next important resistance trading level comes in at 1.44. If we do manage to move up to this level, I expect significant sell side interest.
The above-mentioned market views and content reflect only the opinion of the author, not that of ayondo. This service is for informational purposes only and does not constitute advice or investment advice.