More strength for the pound?
English & Spanish
Sterling had another fairly good week managing to get up to the mid 1.18s (to the Euro) before retreating back as the session closed. There were some fairly good UK economic figures last week and that, plus the fact that sentiment is starting to change against the Euro, helped Sterling become a bit of a flavour for the month.
The Euro fell a little out of favour due to the fact that there were elections in Austria and a constitutional referendum in Italy. The possibility that both could lead to referendums about whether the said countries should stay in Europe, added a bit of spice to the market and negativity to the Euro. Of course, we will have to see what happens, but after Sterling took a massive down move after BREXIT, we are now starting to see some sort of recovery.
Unfortunately, the BREXIT subject still comes up regularly. Sterling will react to any news that gives us a clue about when the official exit is or how it will be portrayed, hence soft or hard exit! For us, these are levels to maybe be enjoyed as they may not last too much longer. It does seem that any negative news on the pound will take it back down again.
Although it will not be one way traffic, we do think the pound will pull back a bit. Maybe not straight away, but it could weaken again in the first quarter of 2017. But, where will we go this week? We think it will stay in a fairly close range. We could see 1.17 to 1.19, and as the year comes to an end, we could settle towards the bottom of this area.
As usual, watch out for any market comments or news that could affect the direction of the rate. Also, watch STG/USD. A good move above the 1.27 level may help the Pound move up against all other currencies. It may be the festive season, but Sterling is not quite ready to add to the Yuletide celebrations!!!!
Have a good week!
The Premier FX Team.
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This article was updated on the 5th of December, 2016.