Tactics and Analysis, July 3, 2017 – Pound Retains Staying Power

The Pound has continued to find takers the past week and could prove to be an interesting trade in the short-term. The Pound is near important resistance and is trading around the 1.30 level against the U.S Dollar. Traders may be tempted to continue long positions as speculative trades.

Pound Sustains Surge

The past week of trading for the Pound against the U.S Dollar has provided traders with a strong freight train like movement upwards.

While there has certainly been periodic downturns the past week when selling has outpaced buying, the Pound has shown it has the capability of attracting attention and holding onto momentum. The British currency in the short-term, mid-term and long-term has continued to provide a continuous firework display regarding its value.

After suffering a setback when Prime Minister Theresa May’s early election in June backfired and she lost her governing majority the Pound declined, but the past two weeks of trading has seen the British currency retrace and it has climbed to important resistance around the 1.30 level against the U.S Dollar.

Pound Recovers Mid-Term Highs

The Pound has done so well the past couple of weeks, it is now testing its high-water mid-term valuations. Bank of England Governor Mark Carney’s public acknowledgement last week that the U.K central bank will have to consider tightening its monetary policy, if other central banks become more hawkish regarding their monetary policy added fuel to a speculative fire burning for the Pound.

The Pound has certainly been full of tests and traders – taking into consideration the wild ride the British currency has provided the past year – know they must remain alert. However, given the historical high values of the Pound, market sentiment among traders may continue to seek upward movement in the short-term.

Long Term Hurdles Remain

Questions do remain about the overall health and prospects for the Pound taking into consideration the ramifications the Brexit will have on the U.K economically.

But while Prime Minister Theresa May certainly suffered a defeat in early June, she has held onto power with her Tory government. And the fact their hold on power is not as strong as it once was, gives credence to the notion the U.K will have to take a softer stance with their Brexit negotiations.

Investors in the short-term may feel more optimistic about the mechanics of the Brexit because they believe the U.K government is more likely to be pragmatic economically. Under the current political conditions investors may continue to speculate that the Pound has the potential to add value.

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

Yaron Mazor is a senior analyst at SuperTraderTV.

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