Pound holds higher after earlier spike

The pound ran some stops earlier today with EUR/GBP falling below 0.8600

EUR/GBP D1 24-02
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The pound continues to do no wrong since the start of the year as the spike earlier today just bolsters the technical picture in the quid across the board for the moment.

EUR/GBP ran stops below 0.8600, falling quickly to a low of 0.8541 and that also pushed cable higher from 1.4130 to 1.4237 before gains retracted a little.

That said, the technical momentum remains very much unhindered with EUR/GBP keeping below 0.8600 and still looking poised for a potential move towards 0.8300.

Meanwhile, GBP/USD is also keeping its form as it starts to look towards the 2018 highs around 1.4345-77 next:

GBP/USD W1 24-02

As things stand, there are a few narratives (▼) working in favour of the pound and unless there are signs that they may be derailed, it could be tough to fight the continued push higher in the quid until the next set of technical levels are reached.

1. BOE shelving the idea of negative rates, keeping it as an insurance policy

2. The market is betting that the BOE may have to raise rates sooner rather than later

3. UK vaccine rollout continues to progress smoothly

4. UK economic reopening timeline set out bolsters summer/Q3 outlook

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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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