Tactics and Analysis, July 25, 2017 – Pound Needs to be Watched

The Pound will turn volatile tomorrow when the U.K releases its GDP numbers and the U.S later brings forth the FOMC Statement. The Pound has been stronger in the short term and we expect investors will position themselves ahead of tomorrow’s risk events.

Pound Likely to Find Volatility Again

The Pound has put in respectable gains against the U.S Dollar the past week of trading, but it remains a potentially volatile currency.

The Pound has been trading above the 1.30 value against the U.S Dollar in the past twenty- four hours, but traders may continue to be suspicious regarding its results.

The Pound has fallen steeply in the past month and then shown the ability to recover. For patient traders, the swings in value via the Pound have been OK. However, for nervous traders who like get nervous when volatility is rampant, the whipsaw action has likely proven hazardous.

Test of Lows Followed by a Bounce Higher

In the mid-term, the Pound has tested has shown a tendency to fall through support and test low water marks only to bounce higher. Political and economic news from the U.K continues to create a tough trading environment.

However, the recent viewpoint among traders regarding a more dovish Federal Reserve has created gains the past week. Tomorrow the U.K will see Gross Domestic Product numbers and the U.S Federal Reserve will issue its Monetary Policy Statement.

U.K. Growth Numbers and U.S. Federal Reserve

The combination of the U.K data and the U.S central bank on Wednesday will cause a large test of value between the Pound and U.S Dollar over the next day.

Investors are likely to position themselves according to their outlooks. If the Pound gains momentum a test of the 1.31 level against the U.S Dollar may be seen.

If economic data is poor from the U.K, and is combined with a surprisingly aggressive U.S Federal Reserve pronouncement the Pound could get weaker. However, the Fed is not expected to be aggressive with its outlook.

In the short term, we believe the Pound may be positive. Mid-term and Long-term we are unbiased.

Yaron Mazor is a senior analyst at SuperTraderTV.

SuperTraderTV Academy is a leader in investing and stock trading education. Sign up for a class today to learn proven strategies on how to trade smarter.