Sterling has met resistance under 1.20 against the EUR and is struggling to break through this key level for the pair.
Despite this week’s positive move, I am not convinced that the recent trend will allow the Pound to sustainably move above this threshold.
Sterling has gained over two cents following UK Prime Minister Theresa May’s decision to call a snap general election in June. This positive move went against the grain, as historically any political U-turns usually bring with it a level of uncertainty and the currency in question is put under pressure. As regular readers will know any economic & political uncertainty is a currencies biggest downfall and for this reason I would be extremely tempted to take advantage of Sterling’s gains over the past 48 hours.
There are still many unanswered questions and despite many assuming the result of the election is a forgone conclusion, last year’s political outcomes in terms of the Brexit result and President Trump’s victory, should head a warning to us all that the expected outcome does not always come to fruition.
There is no doubt Sterling has gained a foothold and EUR sellers may well have missed the opportune time to sell their positions but the current levels remain attractive, certainly when you consider the history on the pair.
The main talking point over the next few of weeks is likely to centre around the French elections and with the far right Marine Le Penn once again gaining support, having seemingly been out of the race, investors are likely to be extremely wary about what the outcome could be should she get into power. With so much economic and political uncertainty across the Eurozone region are you prepared to gamble on a seismic shift in market conditions, which would be needed to significantly boost the EUR value in my opinion.
My overall opinion is that both buyers and sellers should be looking at short-term market opportunities to secure their transfers, rather than gamble on the long-term outcome whilst so much uncertainty surrounding the UK & Eurozone economies remains.
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