Pound looks technically weak

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The British pound has continued its winning streak today after breaking through the $1.30 mark in yesterday’s trading but some analysts warn it may be a dead cat bounce and a reversal of trend may be on the way.

Steve Barrow, head of G10 strategy at Standard Bank, has joined a number of analysts by predicting that the pound will fail to shed the stigma surrounding Brexit, which he believes will be a long and painful process, and will ultimately cause problems for the British currency .

“The real problem for the pound is that Brexit is more of a marathon than a sprint,” Mr Barrow said.

“So while there might be the odd occasion when the pound ‘wins’ a sprint on citizens’ rights, or some other issue, the outcome of the whole race has probably been determined already.” He added.

From a Technical point of view the pound is also looking vulnerable having made a lower bottom towards the end of April compared to the end of September and it looks as if there is a double top forming with the first top being the start of August.

The pound will run into significant pressure at the $1.31 mark which will form the second and lower part of the double top and may also be the cause of the pound’s trend reversal

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