Interactive Investor

Holiday money: sterling vs US dollar on a sticky wicket?

28th April 2022 07:37

Alistair Strang from Trends and Targets

As thoughts turn to summer breaks and overseas travel following two difficult pandemic years, independent analyst Alistair Strang looks at how much a pound will buy you in the US.

It used to be the case at this time of year that lots of folk asked about how sterling was looking against the dollar and euro. This year, despite a plethora of TV adverts, we’ve not had a single email asking our thoughts on currency and now, GBP vs USD is looking a bit of a disaster.

Of course, the term “disaster” can be subjective, such as happened today with a garden shed!

The immediate situation suggests weakness continuing below $1.2500 risks an attempt at $1.2210 and hopefully a bounce.

We’re not the only people capable of drawing a Red line in crayon since the lows of 1985, and anticipate achieving such a target level will be judged as sufficient to provoke a rebound.

Unfortunately, it may prove worth remembering the Covid-19 drop of March 2020 proved the Red line can be broken. As a result, we’d advocate caution if $1.2210 breaks as our secondary calculates down at $1.1721, a level where the currency pairing almost must bounce.

To get out of trouble, the relationship needs to exceed $1.2700 as this should provide early warning for surprise recovery to $1.3047 initially.

Visually, there’s a heck of an argument suggesting hesitation at such a level, due to movements during March and early April. Our longer term secondary, if $1.3047 is exceeded, works out at $1.3342.

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. 

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