EURUSD and GBPUSD remains under pressurePosted on Sunday, April 9 2017 at 2:37 pm GMT+0000
Despite the negative risks resulting from the recent events, the dollar remains strong and the US economy continues to be the best in the world, while negative pressure on the euro is preventing any upside extensions.
The euro remains under pressure due to several factors, including fears resulting from political concerns. A survey of 80 central bank reserve managers revealed their readiness to replace the euro with other currencies due to political factors, including concerns related to the rise of anti-European Union parties.
Those parties’ victory in the French and Italian, will have a negative impact on the euro, pushing investors out of risky assets and into safe havens such as the Japanese yen, so the USD / JPY may reach the 125 level and the Euro might hit the 0.9500, at the end of the year if the worst scenarios were applied.
The Sterling continues remain in a range of 1.2700 to 1.20000. Thus, the recent quarterly gains recorded against the dollar can’t be seen as significant.
I think that the negotiations between the EU and UK may become difficult in the upcoming stage. The Union will not tolerate its conditions, giving Britain an example to other countries that may follow suit to secede, something that could carry negative impact on the Pound.
Scotland’s demands for a new independence referendum, the internal opposition for Mai and the demand for early elections are all elements that might incur instability in the Kingdom. I expect negative pressure to continue and the GBP/USD might target the 1.2440 in the near term. In the long run, any breach below 1.2000 could open the way for the 1.1600 level.