Image © BruceG1001, reproduced under CC licensing
An interesting note has come in from technical strategists at Citi who have told clients they are buying the Pound while selling the Dollar.
Strategists have apparently established a long GBP/USD position at $1.3139, looking for a move north of $1.40.
The call comes as the Pound-to-Dollar exchange rate pushes higher to a three-month high at 1.3237 amidst a flow of Brexit developments that suggest a 'no deal' Brexit will likely be avoided on March 29. Reports suggest Prime Minister Theresa May will offer parliament a vote on a 'no deal' Brexit on March 29 or a three-month delay which would allow her to seek further concessions from the EU.
But, the focus for Citi is a technical one with analtysts noting the monthly chart of GBP/USD continues to indicate further gains overall given the hold of the 76.4% retrace against the trend lows and bullish monthly reversal seen in January.
According to strategists, the price action and setup looks like that seen in the mid 1990's, after the UK had already crashed out of the ERM in late 1992, indicating a rally is due.
We don't have access to the charts, but we can have a look at the long-term and medium-term charts to get an understanding of what is happening.
Firstly, the long-term chart, based on Bank of England GBP/EUR data, which encompasses the 1992 period:
Secondly, the regular medium-term chart, which is set at monthly intervals:
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