In Late January, in an article named, “FxWirePro: Sell pound targeting 1.376 against dollar”, available at https://www.econotimes.com/FxWirePro-Sell-pound-targeting-1376-against-dollar-1122287 we warned that the recent strength of the Pound, which has been fueled by a weaker dollar, an initial agreement between the United Kingdom and the European Union over Brexit bill and two year transition period, and a hawkish Bank of England (BoE) might fade quickly over the domestic political uncertainty brewing in the UK. We also warned that the risk of a correction in the dollar is also hanging over the pound, which recently reached our bullish target of 1.43 against the dollar. In that piece, we urged our readers to go short on the pound at the then current rate of 1.413 and at rallies around 1.42 against the USD targeting 1.376.
Later, in a follow-up review, we further extended the target to 1.354 area, https://www.econotimes.com/FxWirePro-Call-Review-GBP-USD-target-reached-at-1376-new-target-1354-1177319
The pound is currently trading at 1.36 against the USD; very close to our 1.354 target area. Our calculations suggest that a further decline is possible with a target as low as 1.3 area. However, we expect the 1.35 area to act as a key support and expect the pound to bounce back from there.
We are not yet confirming the 1.3 target though it is in line with our longer-term bearish parity outlook for the pound as we expect some weakness in the dollar going ahead. We would assess the new 1.3 target in our next review and we would like to urge readers to book profit around the looming target to the tune of 20 percent, which would bring the total profit bookings to 50 percent.
