The Pound continues growing. Overview for 19.01.2018

During the third week of January, the GBP/USD continues reaching new highs and it seems like there is more to come.

The British Pound is feeling quite confident against the USD. Over the first three weeks of January, the Pound added 2.6% and right now is trading close to the highs it reached on June 24^th 2016, the day after the Brexit referendum took place in the United Kingdom.

On one hand, the Pound has been growing due to the weakness of the US Dollar. After investors decided that the US Federal Reserve was going to increase the key rate in 2018 slower than they expected, the USD found itself in a losing position. Many traded currencies skyrocketed immediately, including the Pound. It was probably the major driver for the British currency, because other reasons look less impressive.

On the other hand, the Brexit negotiations are running their course without any stresses and unpleasant “timeouts”. Jean-Claude Juncker, the  President of the European Commission, emphasized this week that he would be very glad to welcome the United Kingdom as a trade and economic partner of the European Union after the Brexit procedure was over. Right now investors are waiting for the second stage of negotiations, which is scheduled to star quite soon.

It’s quite interesting, but not all Brexit documents have been agreed by the British Parliament members. For example, in the lower house of the Parliament this week they had been discussing and voted in favor of the British legislation’s being dominant over the European legislation. There are no difficulties here, but agreements from different sides take a lot of time.

It may well be that the current uptrend may finish quite soon despite the Pound’s solid positions and rather positive statistics from the UK. As soon as the US Dollar finds a reason for a reverse, the Pound will start getting weaker. However, given the fact that no one knows when and how it is going to happen, a short-term scenario for the British currency looks pretty good.

RoboForex Analytical Department