Sterling Continues to Hold its Ground & is Last Week’s Currency That Loses Least to US Dollar
|Cable had a great start to this week going from an open on Monday of 1.2341 to close at 1.2488, for a gain of 147 pips. Whereas, last week it recoiled from its post US election high of 1.2673 to close the week last Friday at 1.2591. However, that fall still constituted the smallest drop out of all the major currencies against the US dollar. Yesterday the markets retraced again from Monday’s close falling to 1.2415 by the end of the European session.
The Pound compared to other currencies from developed countries seems to be enjoying more favorability than others. This has mainly to do with the fundamentals, especially of countries like Japan or the Euro area. Both of these currencies are suffering from negative interest rates and a continued depressed outlook for GDP growth and unemployment.
The Pound has benefitted in that recent economic data has been better than expected and inflation is considerably higher the than Japan or the Euro area. The UK has also seen inflation beginning to knock at the door and a much stronger economic outlook for 2017.
On Friday we can expect more important economic data for the UK with the release of GDP, quarterly and yearly. The consensus is for GDP to remain steady at 0.5% quarterly and 2.3% yearly, the same as last month’s data. Any deviation from those expectations could send Cable into rally or rout mode.
If you feel that UK data will be higher than expected then all you need to do is buy GBPUSD with Deal Cancellation protection. This feature allows you to take a position and set-up a stop loss, which if hit during the first hour, will simply cost you the premium you paid to buy Deal Cancellation protection.
Deal Cancellation gives you the option to close a trade, during 1 hour, losing no more than the premium you paid, while allowing you to gain from any positive price movement. The screenshot below shows that to buy £28,000 with a €329.36 would cost €15.27 in Deal Cancellation protection.
If the market rises from 1.24209 then you would be able to close your position for a profit, less the cost of Deal Cancellation. Let’s say price goes up to 1.25009 then your profit would be €210.79 - €15.27 = 195.52, while your maximum risk for one hour would be €15.27.
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