Is the Pound ready to rebound?
At first, it seemed that fears of a British Pound crash immediately post-Brexit were unfounded. Looking back, despite a slight wobble, the Pound’s value held relatively steady for a couple of months or so following the decision for Britain to leave the EU. However, the Pound began to slump once more in September 2016, and more dramatically in October, leading to pundits wondering when the mighty Pound would rebound.
Trading on currency speculation, or forex, is a pursuit that is as old as the notion of currency itself. However, if you can read the market and have the funds to invest, punting strategically on currency can sometimes be a wise idea.
Analyst predict GBP progress
RBC Capital Markets thinks that the Pound may, in fact, be ready for a rebound soon, and their opinion counts for a lot when you consider their status among the top twelve investment banks worldwide, raking in £5 billion in revenue for 2013 alone. Bear in mind, however, that they are comparing the Pound against the greenback specifically, not necessarily against all other currencies. So their advice relates directly to the GBP/USD pair.
On October 25, RBC Capital called the pound against the dollar “a mild risk proxy“; it recommended taking a long position against the US dollar at $1.2225, targeting the cross at $1.2450, and placing a stop-loss at $1.21. However, traders should consider that RBC issued a one-week duration window for its recommendation, and it was crystal clear that it will remain “bearish” on the Pound for the medium term.
As it turned out – as of this week at least — their prediction appears to be paying dividends, as the Pound began to hold at around $1.21 before surging past $1.23 in the space of a couple of days, and it is currently sustaining that momentum.
With speculation over the fragile state of the United States’ political climate, it’s little wonder that people are willing to consider investing against the greenback. It is also crucial to keep in mind balancing investments and not getting too preoccupied with speculation, even when such speculation seems credible.
Spreading investments to diversify and mitigate risk has long been the strategy of investment luminaries such as Warren Buffet, who once said: “Risk comes from not knowing what you are doing.”
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