Politics continue to be the main mover for the US Dollar. Is GBP/USD going through 1.40 the figure? Is it a bit chilly in Antarctica this time of year? Expect the Dollar to remain under pressure as long as the Government shut down continues. Dollar weakness will be supportive of an upside move on Sterling/Dollar. I expect a push through 1.40 the figure although we may see a retracement lower once we have broken through 1.40 as traders may take profit on positions.

If you have a requirement to purchase USD from GBP lock in the recent moves to the upside. You can view the shift higher on the graph below –

GBPUSD 22-01-2018.png

If the Government shutdown ceases? We’ll see a rally in the US Dollar. Lock in the moves on SPOT or on a Forward Contract to purchase USD. Might it push through 1.45 this year and onto 1.50? Possibly. As we’re operating in a ‘new normal’ moves can quickly and aggressively shift direction. Please contact a member of the trading department for a rate of exchange.

Holding US Dollars? Decision time for the remainder of Q1. EUR/USD has hit three year highs above 1.23. Are we going back to levels around 1.25? We have the ECB meeting this week where we expect a more hawkish tone so this may prove the catalyst for a further nudge higher for the single currency. Indeed, the Euro, as we expected, has started the year strongly. Should Mario Draghi, the ECB president, disappoint the market then we’ll be having conversations on EUR/USD edging back to 1.20 the figure. However, I expect the Euro to maintain a positive bias versus the US Dollar for Q1 at the very least.

Back to Cable (GBP/USD). Historically, you’re still at very good levels to convert USD into GBP so it may be prudent to take some risk off the table now and lock in some GBP. We can stagger orders to the downside for you and try and take advantage of any moves lower so you allow some room to capture any upside potential.  Please contact the trading department to discuss implementing market orders.

On GBP/EUR, it’s all kind of well, a bit, ‘meh’. Nothing much is happening. We’re trading in a range of 1.11-1.14. If you can achieve a level above 1.13 to purchase EUR from GBP I would look at locking some in at that level. I think Sterling, on balance, will shift higher against the Euro as the year progresses although for Q1 I don’t see any massive moves in either direction. Should Mario Draghi strike a hawkish tone then we could see GBP/EUR reverse its recent gains. Have a EUR balance that needs to be converted into Sterling? Consider staggering orders to the downside for EUR back to GBP. Please contact the trading department to discuss technical levels and appropriate levels to aim for. Should you wish to discuss your Q1 requirements in more detail please feel free to contact me directly.

You can view the moves on GBP/EUR last week on the graph below –

GBPEUR 22-01-2018.png

What do we have out this week data wise? Main release as mentioned above is the ECB meeting. We also have the ILO unemployment rate (3M) (Dec) out of the UK on Wednesday. There is also GDP figures out of the UK and US this week with Mark Carney, the Bank of England Governor rounding off the week.

Should you have any questions around your currency requirements feel free to drop me a note.

Have a fantastic week.

Written by Liam Alexander.