FxWirePro Short Term Outlook: Current selloffs in pound likely to extend towards 1.21

Despite being the top performer over the last two months and especially since the Republican candidate Donald Trump won the US presidency, the pound in recent days has suffered the wrath of the dollar. The dollar rally sparked after Trump was elected as the President and renewed pace after the US Federal Reserve hikes interest rate this week and indicated that there could be three hikes next year.

 We suspect the recent strength of the dollar would push pounds to a further low, which already failed to decisively break a key resistance around 1.275 area. The sterling has declined more than 300 pips from there and currently is trading at 1.244 against the dollar.

In the short run, we suspect the pound to weaken further towards $1.217 and with a momentum the decline might get extended towards 1.207. However, we at FxWirePro, do not see the pound declining below 1.2 in the short run, while our call for parity in the longer run stands.