British Pound Futures Volatility Forecast (27/02/2011)

The last week we were bullish on British Pound futures because the price was expected to hit the 163.5 area. However, the market did not manage to break through the 162.1 resistance and the price dropped to 161.

The actual volatility is 0.58% (9.2% in annual terms) and even if the curve is upward sloping we think that the market is now ready to head north once again. Specifically, the current volatility level has been breached and surpassed only during the big drop occurred in November 2010 and therefore it is reasonable to believe that market oscillations will now decrease.

The staff of HyperVolatility remains bullish on British Pound futures because the recent depreciation of the US dollar could easily push the price in the 163-163.5 zone. We will try to look for buy opportunities since the minor retracement we saw the last week should be now over. Nevertheless, worse than expected macros from overseas could push higher Pound futures and over the next days there will be quite a few data to watch at.

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