Pound rallies, thank it to Euro

In recent times, rally in Pound has become a rare phenomenon as most of the time it is under selling pressure due to the possibility that United Kingdom may exit from European Union, creating huge political and legal as well as economic uncertainties.

However it is rallying today and today it is up by as much as 0.8% against Dollar. Moreover, today it rose without the support of any positive economic dockets and now looking to extend its gains. Large short covering is likely to have triggered the rally, which now trying now to sustain on its own.

Euro, which for the past few months gained steadily against Sterling, may be very well be responsible for today’s move. For the past few session EUR/GBP has been struggling to make against above 0.812 area, failing which may have triggered large profit bookings.

Pound was also closer to psychological support 1.4, from where it bounced last week.

Now next push may come from Yen. Yen is looking a bit stretch and covering in Yen may as well lead to short covering in GBP/JPY, which in turn will boost Pound further.

Pound is currently trading at 1.423 against Dollar and now on its way higher and become ripe again to short and this time Dollar is the preferred currency.