Pound backed to reach multi-year high vs dollar
Sterling is approaching levels against the dollar not seen since August, and before that March 2022. Independent analyst Alistair Strang looks at upside potential for the resurgent pound.
17th September 2024 07:16
by Alistair Strang from Trends and Targets
Share on
Sterling is strengthening against the dollar, so maybe the markets somehow feel the UK is doing better than the USA. The media attribute the weakness of the dollar to the highly publicised imminent reduction in US interest rates.
- Invest with ii: Open a Stocks & Shares ISA | ISA Investment Ideas | Transfer a Stocks & Shares ISA
There’s a pretty strong argument suggesting the dollar should continue to weaken due to the GBP:USD exceeding the Blue downtrend on the chart below. It’s quite a big deal as this trend line dates back to 2007 and surely a 17-year-old downtrend must mean something to folk and usually, they’re not wrong.
From our perspective, when a value goes through a trend line, the bias of the market tends to change and, in this instance, positive news is tending to enhance positive movements.
This results in a situation, where movement next above $1.3324 should strengthen sterling to an initial pairing target of $1.3584 with our secondary, if bettered, now at $1.4271 and some almost certain hesitation. Since the pairing broke the trend, price levels have pretty much adhered to our rules, so perhaps it’s time to consider a visit to Disney Florida.
Of course, things could go wrong, but the pairing needs weaken below $1.2600 to cause serious concern, allowing reversals to an initial $1.2002 with our longer-term secondary at $1.1410 and a potential bounce. Visually, very little of this reversal scenario makes any real sense.
Source: Trends and Targets. Past performance is not a guide to future performance.
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.