GBP/USD poised for extra gains near term – Danske Bank

Piet Christiansen, Senior Analyst at Danske Bank, assessed the current prospects for the Sterling.

Key Quotes

“After several days with attempts EUR/GBP finally broke below 0.87 yesterday on the back of the ECB minutes, and in line with our prediction, the cross quickly dropped towards the low end of the broad range seen since June last year at 0.8650, where it once again was rejected. A break below this level would send EUR/GBP into fairly uncharted territory”.

“In GBP/USD keep an eye on 1.4245, where a break above this level could pave the way for a test of the post Brexit high of 1.4345. Market is still pricing in around 80% probability of a BoE rate hike in May – hence GBP could still see some support in the coming weeks ahead of the BoE meeting on 10 May”.

“Note however, that speculative positioning is stretched long GBP at the highest level since 2014, according to the latest IMM data, indicating that GBP might be relatively sensitive to negative news and profit-takings etc”.