Recent Sterling price action has led me to revisit my "what to make of Sterling" blog entry from 12 November 2014, seeing as we are now only 3 months from the UK General election (7th May).  In the November 2014 entry it was pointed out that except for a steady under performance against the US Dollar, the rest of the main Sterling charts were all positive, at joint second in our major currency rankings.  Three months on, has anything changed?  Does Sterling still look like an out performer, or do the charts now paint a different picture?

Remarkably, very little appears to have changed in the three months since.  We still have Sterling near the top of the medium-term rankings and it is now trying to leap-frog the US Dollar.  There is a potential multi-week base on the GBP/USD chart (see left) suggesting a partial retracement of the 13% decline from last July's 1.7186 peak.  Cable's major underlying trend is still down, but scope exists for a return towards the 1.58-1.61 area as we head towards polling day.

 

 

Elsewhere, Sterling continues to look good against many of the other major currencies.  EUR/GBP still looks to be pointed firmly downwards, GBP/JPY (see left) has recently completed a multi-week base near the base of the multi-year bull channel, and most of the other major pairings have a bullish succession of rising highs & lows for the Pound.  All in all, as we head towards May's election date, Sterling is looking good and set for a further improvement.

 

 

At the moment the opinion polls show little chance of one party gaining a majority.  The Conservatives look to be gaining momentum at the expense of Labour, helped by a strong and improving economy which for the first time in a number of years has seen average pay growth overtake inflation.  Against this backdrop, it is difficult to see how the existing trend for an improving Conservative / weakening Labour vote will change, and this may be helping to underpin the Pound.  Of course, a sudden shift in the opinion polls could change Sterling's outlook, but at the current time this looks unlikely and seems to support the case for continued Sterling out performance. 

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