Cable consolidates below 1.30, will Sterling manage to stage a comeback?

The Pound’s woeful performance has continued over the past week, with the rate of cable (GBP to USD) now trading comfortably below the key 1.30 mark many were concerned it would drop below again.

The solid outlook regarding the US economy and the resulting interest hikes have been pushing Sterling higher for some time now, and the GBP/USD rate hasn’t been helped by the weakening Pound as Brexit realities and the cracks within the surface appear.

Over the weekend the issues in Turkey have been a major headline, and although this issue doesn’t necessarily impact the Dollar or the Pound directly, it’s affecting USD exchange rates as investors seek a safe haven currency which most definitely isn’t the Turkish Lira at the moment. It’s lost almost 50% of its value against the US Dollar in just the past year.

There are fears that the issues in the US may spill over into the Euro, as there are many financial institutions in Europe with exposure to Turkey. Should these fears continue and the European banking shares continue to show signs of instability as just how much exposure they have becomes apparent, there could be further gains for the US Dollar.

This is because investors are short selling the Euro, and with EUR/USD being the most traded pair in the world, the short selling of the Euro is resulting in a boost to the US Dollar’s value.

Short selling for those of our readers who aren’t aware of it, is when day traders bet that the currency will drop.

Now that the Bank of England has begun hiking interest rates, and the Pound has remained flat since, the chances are that Brexit will continue to be the main driver of currency fluctuation for Sterling exchange rates. As long term readers will be aware, it’s very hard to tell when these updates will come so if you wish to be updated in the event of a major market movement, do feel free to register your interest with me. You can get in touch using [email protected].

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