The Great Britain pound was the strongest currency on the Forex market today, rallying against other most-traded counterparts. But analysts were not convinced by the rally, arguing that it was a result of short-sellers taking profits, not supportive fundamentals. With not many fundamental factors supporting the currency and several high-profile events this week, specialists think that it is too risky to buy the sterling.
The main theme for Britain’s currency remains the Brexit and a trade agreement between the United Kingdom and the European Union. UK Prime Minister Boris Johnson proposed last week a bill that will make changes to the Withdrawal Agreement that has been already accepted by the EU. Members of the Parliament will debate in the House of Commons over the bill this week. The bill has already drawn heavy criticism from EU officials as well as some UK politicians as a blatant breach of the already existing international agreement.
Another important event will be the Bank of England monetary policy meeting on Thursday. While no changes to the policy are expected, traders will closely watch comments from the central bank’s officials.
There will also be several important macroeconomic releases over the week, including employment, inflation, and retail sales data.
GBP/USD rallied from 1.2781 to 1.0882 as of 15:08 GMT today. GBP/JPY rose from 135.56 to 136.14, touching the high of 136.58 intraday. GBP/CHF jumped from 1.1614 to 1.1680.
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Analysts Remain Unconvinced by Sterling’s Rally
