Spread Betting on the Pound - US Dollar Market
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We are now well into 2010 but the median price for the key Pound/Dollar forex market has been $1.6400 since May 2009.
The market has consistently oscillated around the $1.6400 mark. There have been a few breaks above $1.6600 and the odd peak below $1.6000 but we continue to oscillate.
In trading parlance, support levels have held and then given up the ghost. They have then become resistance levels, those resistance levels have then done the same thing. The cumulative effect has been the most minor of moves.
With Goldman Sachs, and others, estimating that the UK economy will grow faster than many in 2011, perhaps the rumours of Sterling’s death have been greatly exaggerated.
The excitement of such positive predictions has bolstered Sterling. In contrast, the Euro has rather been left behind as the tensions in the EU project have come to the fore.
Having said that, it is difficult to be too negative on the Euro. The smaller nations causing the problems are not particularly significant to the total European Union GDP.
The woes over the whole issue will only grow if the European Central Bank does not play a strong-arm policy. At the moment Jean-Claude Trichet, president of the European Central Bank, and others are, indeed, playing hard ball. They are doing this for the fiscal security of the larger nations and we shall have to hope that they continue to do so.
But still the currency markets seem to be in two minds as to the currency of choice. Sterling looked dead and buried in 2009 and the start of 2010 saw a stronger Dollar.
Given the problems hanging over Greece, Portugal and Ireland that have dominated news flows, the target of Sterling parity versus the Euro has drifted away from dealer’s radars as well.
But away from the populist headlines Sterling has appeared more solid. This continued to be the case when the ECB sent out the message that rates in Europe will, probably, remain at 1% throughout 2010. This was also the case when Sterling had a good day after the hawkish comments from Bank of England policy setter Andrew Sentance.
Yes Sterling has benefited from the woes of the Euro. However, more recently the UK has seen a surprise jump in inflation. That gave the BoE enough evidence that the UK stimulus has to stop.
As Simon Denham of Capital Spreads commented, “UK inflation should be capped and the rate of inflation should only be a temporary spike. The VAT hike will also apply pressure. The UK’s growth prospects do not warrant inflation to remain higher for long”.
Perhaps Mr Denham is suggesting that UK rates will also remain low and not support the Pound for long.
Having said all this, whether you are spread betting on the Forex markets or trading the Pound/Dollar markets you need to be careful. Forex markets are rarely a one way bet. Like inflation they have a habit of spiking when you least expect it.
Spread Betting Forex Comparison
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| Dollar/Yen Daily |
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| Dollar/Yen Future |
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| Euro/Dollar Daily |
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| Euro/Dollar Future |
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| Euro/Sterling Daily |
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| Euro/Sterling Future |
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| Sterling/Dollar Daily |
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| Sterling/Dollar Future |
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| Sterling/Euro Daily |
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| Sterling/Euro Future |
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| Other Forex |
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The above spread betting markets may also be available with other companies. Also see Comparison Table Notes.
For more details on trading foreign exchange rates see Forex Spread Betting.
With spread bets you can lose more than you initially invested. Ensure that spread betting matches your investment objectives. Spread betting does carry a high level of risk to your capital. Familiarise yourself with the risks that are involved. If necessary, seek independent advice.
"Spread Betting on the Pound - US Dollar Market" last update by R Thomas, 12-Feb-2010
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
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