Sterling Set to Remain Choppy Ahead of UK Election
A look at the FX Markets from Michael Hewson, analyst, CMC Markets.
The performance of the pound over the next couple of weeks is likely to continue to trade in a broad range and remain choppy as we head into the UK election on the 6th May.
We can already see the evidence of that against a basket of currencies. The sterling index has traded roughly between its 38.2% and 61.8% Fibonacci retracement levels of the down move from 81.80 to the March lows at 76.10 over the past couple of weeks.
It is currently finding some element of support above the 78.25/30 area which is the 38.2% area, and just above the 50 day moving average. In fact, the recent gains on today’s positive inflation data have so far been capped near to the 79.10 area, which has a trend line resistance from the 18th February highs at 80.30.
Against the dollar the pound should find some resistance above the $1.5500 area where there is trend line resistance from the 17th February highs at $1.5815.
There is also a cap at $1.5520/30, the previous highs, and the 38.2% retracement of the down move from the November highs at $1.6875 to the lows in March at 1.4780 at $1.5560/80.
On the downside the cable appears to be building up some support around the $1.5200 level which links the April lows.
The $1.5350 area has acted as a key pivotal level over the past few weeks acting as both support and resistance in equal measure.
Today’s break above $1.5350 to hit $1.5420 today needs to be sustained to re-target $1.5500, while a break below $1.5200 would likely re-target the April lows at $1.5120.
Recent UK opinion polls showing the likelihood of a “hung” parliament will continue to weigh on the pound, with the possible exception of the Euro, where technically it should remain strong while above the 200 day moving average.
Lack of clarity about efforts to tackle the UK budget deficit will also weigh on any upside in the short term.
While below the 200 day MA the Euro should drift back towards its 9 month trend line which currently comes in around the 0.8680.
If the Euro is able to close above its 200 day moving average the picture could change quite rapidly and we could see a sharp move higher, but that doesn’t seem likely at the moment given it would take some sort of resolution to the sovereign debt woes currently afflicting the Euro zone, and that doesn’t seem likely in the short term.
Spread betting, CFDs and FX are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.
The above content does not constitute investment advice. Neither CMC Markets nor Online-Spread-Betting.com accepts any responsibility for any use that may be made of the above.
Article approved by CMC Markets. CMC Markets is authorised and regulated in the UK by the Financial Services Authority, registration no. 173730.
Note - Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
'Sterling Set to Remain Choppy Ahead of UK Election', Feature by CMC Markets, last update: 22-Apr-10
Related articles:
CMC Markets, 27-Jan-12,
CMC Markets offers 1200+ Spread Betting markets and a wide range of CFDs. With a CMC Account you can trade 24 hours a day on Forex, Indices, Commodities and...see: CMC Markets
CMC Markets Spreads, 27-Jan-12,
CMC Markets offers both Spread Betting and CFDs. You can trade 24 hours a day on a wide range of markets including Indices, Currencies, Commodities and...see: CMC Markets Spreads
CMC Markets Spread Betting, 27-Jan-12,
The new CMC Markets spread betting platform delivers consistently competitive spreads. These new spreads, improved margins and additional decimal places are exclusively available on the new CMC Markets trading platform. With CMC you can...see: CMC Markets Spread Betting
CMC Markets Offer, 17-Jan-11,
Spread Bet Risk Free for a Week with CMC Markets. Open a CMC Markets account and fund it with £200. You will then be able to...see: CMC Markets Offer
Forex Indicators, 7-Jun-10,
Forex Indicators: EUR/USD has broken its final short term support at $1.2110 and plummeted on Friday. The next support level is from Feb 2006 and is at...see: Forex Indicators
Stock Market Indicators, 26-May-10,
Stock Market Indicators: The SPX 500 has reached yet another support level at 1043, can it hold? The MACD is again showing an acceleration in the...see: Stock Market Indicators
Commodities Indicators, 14-May-10,
Commodities Indicators: Gold reached a fresh all time high on Wednesday, the metal hit $1248.5. It is currently...see: Commodities Indicators
Commodities Set For a Correction?, 7-Jan-11,
The Reuters CRB has always been a good indicator of broad commodity strength so when it starts to exhibit signs on a possible reversal it’s usually time to sit up and take notice. Since the peaks of 2008 the...see: Commodities Set For a Correction?
Best Spread Betting Service, 30-Nov-10,
CMC Markets have been awarded the title of 'Best spread betting service' by readers of Shares Magazine at the Shares Awards 2010. ''The award is very important to us because it is voted for by...see: Best Spread Betting Service
US Index Spreads Fall to Key Support Levels, 2-Jul-10,
US Index Spreads Fall to Key Support Levels: The last three months have been fairly volatile ones for equity markets in general and certainly the first quarter of 2010 began promisingly. The S+P 500 had, until this quarter, posted 4 successive quarterly gains in a row since...see: US Index Spreads Fall to Key Support Levels
Spread Betting Markets Looking Bearish, 25-May-10,
Spread Betting Markets Looking Bearish: The recent declines in equity markets over the past couple of weeks have prompted some investor nervousness about the sustainability of the recent rally of the last 14 months. We've certainly seen corrections similar to...see: Spread Betting Markets Looking Bearish
Euro Spread Betting and the Bailout, 12-May-10,
Euro Spread Betting and the Bailout: The Euro has continued its slide back from its overnight highs after a slow realisation that the bail-out, while welcome from the point of view of bringing down...see: Euro Spread Betting and the Bailout
Looking to improve your trading results? Get free trading tips and trading analysis as well as the latest trading offers »
Trading News.
Risk Warning:
Spread Betting carries a high level of risk
to your capital and you can lose more than your initial investment,
it may not be suitable for all investors. Ensure you only
speculate with money that you can afford to lose and that you fully
understand the risks involved and seek independent financial advice where necessary.
Disclaimer:
Online-Spread-Betting.com does not endorse the information and
analysis available on this site. It is provided purely for information
purposes and is delivered as a personal view of the writer. Under no circumstances
is the information hereon to be used or considered as, an offer to sell, or a
solicitation of any offer to buy. The website content does not constitute investment
advice and neither the individual contributor nor Online-Spread-Betting.com accepts any
responsibility for any use that may be made of the content.
* Tax Free Trading:
Tax law is subject to change. It may also differ if you pay tax in a jurisdiction outside the UK.
