Today is Sat, September 23, 2017 0:15:45 GMT
RSS Follow Us Follow us on Twitter Friend us on Facebook
Contributors Someone is Buying Pound Sterling as Euro Chops Sideways
Andrei Knight, Chief Currency Strategist, fxKnight.com
It seems that someone has been aggressively buying the Pound yesterday and even overnight into this morning, enough to push the GBP/USD up 74 pips to its weekly central pivot point, all while the EUR/USD moved barely 30 pips, mostly to the downside.

Rumor has it that this “someone” was ExxonMobil, which begs the question why the American oil giant would be so interested in acquiring Sterling.  Could this, perhaps, be a prelude to a buy-out of BP?  Certainly, share prices of its British counterpart have been badly beaten down by last year’s Gulf of Mexico fiasco following the explosion aboard the Deepwater Horizon, not to mention recent drops in worldwide oil prices.  Currently trading near lows not seen since 2004, that makes it a ripe target for takeover.

Translating this into a currency play, whenever I see the Pound move as the Euro stands still (or vice versa), I immediately turn my attention to the EUR/GBP.  In this case, I’m looking for a short, as the Pound is on the opposite side of where it normally sits on the GBP/USD pair.  Thus, as the Pound gains while the Euro stagnates (or, even better drops due to the next round of bad news on the EU debt crisis), we can expect the EUR/GBP to drop, as less Pounds are needed to purchase each Euro.

Thus far, a Fibonacci level at 0.8381 has held nicely as resistance, though I’m prepared to let it the EUR/GBP retrace up as high as 0.8438, where its weekly central pivot point is resting, before rethinking my trade idea.  Since this particular Fib pattern originally retraced up to the 50% level at 0.8657 back on November 22nd, I’m ultimately looking for a downside target at 161%, or 0.8271.

Recent posts by forexnews