Interactive Investor

Can sterling hit multi-year high versus euro?

28th July 2021 08:06

Alistair Strang from Trends and Targets

The pound has strengthened against the euro in recent months, but is it really heading to €1.25?

As it appears those of us who’ve been fully vaccinated are welcome in Europe – or to be more succinct, our money is welcome – it currently appears the UK Pound is due to strengthen against the euro, rather neatly in time for the holiday season commencing.

Certainly, the immediate suggestion is it may be best holding onto sterling in the relatively near future as a boost to the pairing looks very possible.

Presently trading at around €1.1747, the relationship need only strengthen above €1.1760 and it calculates with an initial ambition of €1.1825.

Visually, this challenges the previous high of 2021 but, while some hesitation is possible, we suspect the pairing shall head higher, if only thanks to the irrational dip a few weeks ago. Above €1.1825 and it becomes pretty easy to produce €1.2006 as a secondary target. At this level, some real nerves can be anticipated with the relationship visually challenging the pre-pandemic highs.

For the longer term, it shall be worth remembering the pair has already broken through the Blue downtrend since 2015 and, arithmetically, we can ‘prove’ a distant attraction is coming from a distant looking €1.2505

For everything to go pear shaped, things need to founder below €1.145 to cause a real headache. We’d regard this as early warning for everything going very wrong.

Source: Trends and Targets. Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.