Sterling has become a very difficult currency to track- taking very large swings at regular intervals, sometimes, for reasons unknown to anybody.
Throughout the last week, Sterling has gained back a lot of ground- going from 1.14-1.24 against the U.S Dollar, and going from 1.05-1.12 against the Euro; all while stock markets around the world have been tanking.
The reality is, the situation with Covid-19 in the UK is worsening and will continue to go that way for the next couple of weeks, maybe longer. So in my mind, there is an element of month-end and quarter-end profit-taking going on at the moment which has elevated Sterling beyond its recent lows.
Sterling got hit the worst recently when the Dollar gained strength, so it is expected that Sterling would benefit first when the Dollar begins to weaken- I am unsure about if this will be a long term thing given the fact that the UK is not at the peak yet as far as Covid19 cases are concerned, or in a complete lockdown yet.
This is yet to be another volatile week for Sterling- and my only guidance is to continue hedging yourselves on the way up- as we have seen how prone The Pound is too sudden weakness. The U.S Dollar is expected to continue weakening as the situation worsens across the Pond, and all eyes will be on the Euro has many European countries should begin to peak.