Golden opportunity to hedge the risk that the pound drops
Nov 20 (Reuters) -The pound rarely strays above 1.2000 versus the euro and each time it has done so since 2017 there has subsequently been a big drop. This is a golden opportunity to hedge the risk that happens again.
Speculators might also take advantage of this rare rise for the pound but it is those who need to hedge who would be wise to take advantage of what may prove to be a very brief window for them to act.
Since plunging to 1.0743 in 2017 following Brexit, the pound has only risen over 1.2000 in nine of the 87 months that have passed, which includes the last three months.
Excluding this year, the longest period of trading around 1.20 was four months in 2022 when it reached 1.2187, and that was followed by a drop to 1.1275. The pound slumped to 1.0524 following a brief rise over 1.2000 in 2020.
When the pound peaked in 2020 and 2022 the rally had become stretched above the top of the 20-month Bollingers and is once again overbought, which significantly heightens the risk of a reversal.
EUR/USD's failure to break out has one likely outcome
For more click on FXBUZ
GBPEUR https://tmsnrt.rs/4fVk5lp
(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
</body></html>Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
