What will it take to breach 1.15 and Remain above 1.15?
The pound has made significant gains against the majority of major currencies recently and has breached key resistance points against the greenback and the Aussie, 1.40 and 1.80 respectively. Against the Euro however we only saw GBP/EUR above 1.15 for a very small window of opportunity and the market quickly retracted.
There has been several catalysts for the pounds advance. We have seen a significant improvement in UK retail sales, previous figures came in at – 0.2% and there was predicted to be an increase to 0.4%. They actually landed at an impressive 0.8%.
We also witnessed average wage growth move closer to parity with inflation which is a real indication of a healthy economy. There was already a strong probability of a rate hike in May from the Bank of England (BOE), but these data releases bring it even closer.
There was further good news when it was announced the UK would have access to the single market during the Brexit transitional period. I am of the opinion if these events lack the influence to keep GBP/EUR above 1.15 it will take something significant to do so, Possibly clarity over the contentious Irish border deal.
For the last 11 months 1.15 has been a resistance point and so my stance remains the same for Euro buyers, if the market is in the 1.14s you are in a good position to trade.
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