The Pound Is ‘Very Cheap’ for This Currency Strategistby and
Sterling advances to touch strongest level since October
Buying by interbank investors triggers stops, says trader
The pound rose to its highest level since October versus the dollar, which faltered after investors cited a lack of clarity in tax plans unveiled by President Donald Trump’s administration.
Sterling advanced for a third straight day to test the psychologically significant 1.2900 level against the U.S. currency. Demand from interbank investors triggered stops above 1.2905, according to a trader in Europe who asked not to be identified as the person isn’t authorized to speak publicly. The currency has advanced almost 3 percent since Prime Minister Theresa May announced snap elections earlier this month.
“It’s a general dollar move because of disappointment about President Trump’s tax plans,” said Stuart Bennett, a G-10 currency strategist at Banco Santander SA in London. “Equally, it’s still against a background that the pound is very cheap. There is probably more of a bias when the dollar weakens and everybody moves against the dollar and the pound can maybe outperform.”
- GBP/USD climbs 0.5% to 1.2909, having earlier reached 1.2917, its highest level since Oct. 3.
- Resistance at 1.2905, the April 18 high, while support is at 1.2839, the Asian session low
- There’s a “lot of downside bets against the pound, and in this current environment -- either in the U.K. side ahead of the election or the U.S. side, there’s probably more reason to take profit now and then maybe sell later,” Bennett said
- Yield on 10-year gilts was little changed at 1.07%