Money in Motion

Why the Olympics Will Lift the Pound: Strategist


This strategist sees the games helping the British pound vault to higher levels.

Tower Bridge and City of London financial district
Source: Dominic Burke | Getty Images

If you're wondering about a currency trade on the Olympics, Todd Gordon, co-head of research and trading at Aspen Trading Group, has a plan for you.

Gordon, a technical analyst, has looked back at ten years of performance for host countries' currencies in the three months after they were home base for the Olympics. He told CNBC's Melissa Leethat "there is only one region in the world that benefits in the three months following an Olympics, and that happens to be Europe."

Canada, China, the U.S. and Australia actually saw no change or a weakening in their currencies, Gordon says.

So what does this mean for the British pound?

Economic reports from Britain have been pretty dismal lately, but Gordon says the Olympics will likely add some 0.3% to GDP. And that could help lift the pound out of its current trading range.

"It looks like if we can get a push above the range along with this risk-on scenario, it looks like there's a great trade setting up here," he says.

Will the Olympics Boost the Pound?

Gordon wants to buy the pound at 1.5800, setting a stop in the current trading range and looking for a move to 1.6240.

Kathy Lien, managing director at BK Asset Management, likes the trade. "In the next two weeks, the Bank of England isn't going to rain on the party at all," she says. "I think there's very little risk of any major downside in the pound-dollar."



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