Once again today the Pound has found resistance at the 1.35 level. When a currency hits resistance against a particular level multiple times, participants begin to assign this as a target rate for their currency plans moving forward into 2015. Essentially this is a gambler’s mentality, having an irrational belief that the odds are on their sides.
By all means the rates could hit 1.35. Maybe even higher. But all the data suggests there is more room for the rates to move in the other direction. The negotiations with the Greeks are hardly affecting currency markets at all. The election itself only moved markets by half a cent, and most seem uninterested in the actual discussions, expecting little change. What has moved the rates back up to these levels after a slide recently back into the very low 1.3’s was strong data coming out of the US Economy.
The currency pairing of USD-EUR is the most traded currency pair in the world. The news saw a massive flight of currency out of the Euro and into the Dollar, which devalued the Euro in the short term against other major currencies, such as the Pound.
The rates right now are great and I strongly suggest not getting caught up with a particular target. Especially when the rates start to go down, like a gambler you still hold out for a particular goal when the probabilities are moving further and further against you.
For more information on currency markets and forecasts, or for advice on how to take advantage of the current rates, even if your requirements are months down the line, drop an email to me on jjpcurrencies.co.uk and we can discuss those further.