Given the proximity of the sterling to the $2.0000 barrier, some analysts believe the bulls may be running out of steam. “All the good news has been priced in for the UK,” says Ideaglobal’s Powell, who also points out that later this year the U.S. economy is likely to return to better growth levels, which should strengthen the U.S. dollar.
Overall, Ideaglobal expects the pound to be trading around $2.0000 three months from now. Investor’s Bank & Trust’s Mazanac says since the 70s, it has had a difficult time holding above $2.0000. Short-term support lies at the $1.9500 region, he says, but if that were to give way it would open the door for a move to $1.92. Over the next several months, inflation data and subsequent responses at BOE meetings will be key factors for the pound, with unexpected news or policy moves likely injecting volatility into the marketplace.
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