The steady decrease in the value of Sterling started to tail off to the end of last week, with the rate closing the day at 1.11 having dropped into the 1.09’s after the “flash crash”. There was an array of forecast downgrades for the GBP/EUR rate with some including the Head of FX strategy at HSBC suggesting Parity was on the cards.
The major question is whether Sterling will continue to fall or will there be a clawing back of lost ground. There is currently a huge amount of Sterling shorts in the market place and until most of the selling off is completed, Sterling could be set to fall further this week. Check our live currency exchange rate page here for live updates.
In my opinion the GBP/EUR rate may hit a resistance barrier around the 1.09 mark and could settle at this level for a short time. Until there is some headline uncertainty in the Eurozone, I don’t think Sterling will be able to gain much strength.
The Italian referendum is within a month and there will be general elections for key nations across the EU next year. I believe Sterling has been massively oversold and is now undervalued and with the events coming up it could improve in the longer term.
There is only a few data releases for Sterling this week but don’t let that make you think it may be quiet. The Pound has become a political currency and no longer appears to be driven purely by data. Depending on what comments leading figures make about the economy depicts the performance of the currency.
Considering how volatile the markets are along with the unpredictability of who may say what when, being in touch with your broker is vital to make sure you’re trading at the best levels.
For further Sterling predictions in the coming weeks and months, get in touch with our brokers today on 01494 725 353.
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