The Sterling has been the talk of the town for
months now as it has been breaking multi year highs to reach its current price.
None the less, the next question is what to do now?
The British pound continues to see mixed
conditions against the US dollar gains witnessed earlier in the week as the USD
strengthened across the board. The mixed picture for GBP/USD actually
fits in with the viewpoint at Scotiabank that holds a year-end forecast for the
pair to end at current levels.
The recent short-term forecast for the pound
dollar rate has been mixed with about of weakness taking us up to the Tuesday
positive inflation report. However, with such
a strong inflationary reading would suggest near-term
forecasts are due to be revised higher as short-term resistance levels continue
to be breached.
In the longer term, the break of the major
resistance at 1.7043 calls for further strength. Resistances can be found at
1.7332 (see the 50% retracement of the 2008 decline) and 1.7447 (11/09/2008
low). A support lies at 1.6923.
Adding to the positive technical picture facing
cable is the underlying fundamental picture which suggests interest rate rises
will start to happen within months - rising interest rates are a
currency-positive. All indications from Governor Carney are that interest rate
hikes are likely to begin earlier than the market expects but prove slow and cautious.
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