Pound Sterling's Recovery versus Dollar Still Intact: AFEX

Analysts at foreign exchange brokerage AFEX have confirmed today that they remain optimistic on Sterling's outlook against the Dollar.

"Despite recent erosion no major damage has yet been done to this broad recovery sequence from 1.1800 or so," says Lucy Lillicrap, a technical analyst with AFEX.

AFEX - a brokerage in business since 1979 - say GBP prices would need to drop back through the distant 1.3025 level before an important top is confirmed.

Sterling has been trading higher against the Dollar since the start of 2017 when the broad-based Dollar rally failed and reversed.

Indeed, we have reported on a number of occasions that moves in the Pound-to-Dollar exchange rate appear to be more a story of US Dollar weakness than Sterling strength, so the outlook does largely rest with how much more of a decline the Dollar will endure.

The Pound reached a fresh multi-month high on January 25 when it touched 1.4346, but it has since retreated below the pyschologically 1.40 level to trade at 1.3820 at the time of writing.

But, the trend higher remains in place and AFEX reckon the Pound will ultimately resume the move against the Dollar: "given good/local support extending down toward 1.3600 studies argue current selling pressure will give way to renewed strength in coming sessions."

Resistance to further strength is seen beginning around 1.4075 though once broken effective supply then looks thin until 1.4250/1.4425 areas next.

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