Dollar-Pound Strange Correlation

Dollar-Pound Strange Correlation

There is a strange correlation between the US dollar and the British Pound. The pound goes further than the dollar, whichever direction the dollar takes.

Whenever the dollar rises – the pound rises as well – and also against the dollar. And whenever the USD weakens, GBP weakens even more.

Today, Januray 5th has been a day where the US dollar made gains against most currencies. We’ve seen it rise against the Swiss Franc USD/CHF 1.11, against the Yen – USD/JPY 93.51 and the Euro fell against the dollar to EUR/USD to 1.3567.

Only the British pound gained against the dollar – and naturally against all the other currencies. GBP/USD now trades above 1.4660.

This phenomenon has happened during the holiday weeks, but today, when full scale trading resumed – it has come to an extreme.

The “wildest” pair has been GBP/CHF which gained 4%.  Also EUR/GBP, which was close to parity, drifted away from there. EUR/GBP now trades at 92.70, a daily loss of 3.5%.

This has no econmic justification, and no other reasonable explanation I can find.

Does anybody have a clue?

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.