Sterling’s battle with the Euro continues. Whilst it isn’t quite as venomous as the frightening scenes at the Crufts dog show yesterday, there remains a battle to stamp some authority and create sustained momentum.  

Will Sterling recover some ground against the Euro this week? After hitting lows around 1.1150 we had a rebound towards the end of the week with a jump back above 1.12. We have since broken through 1.1250. You can view the moves on the graph below –

GBP/EUR - 1 Week

I expect Sterling/Euro to move back into the 1.13’s this week. The Euro remains on the backfoot after the ECB meeting where rates were kept on hold and QE remained unchanged. I expect attention to move to Sterling this week after the Italian election, German vote and ECB meeting put the Euro front and centre.

If you have a requirement to purchase Euro’s from Sterling consider placing market orders at 1.13 to take advantage of any intraday moves to the upside. Please contact a member of the trading department to implement an order. The key event this month for Sterling is the EU summit on 22nd-23rd March in Brussels. If there is no transition deal in place this will create further uncertainty. Take some risk off the table and look at covering off any positions prior to this event.

Sterling has weathered the Brexit noise relatively well recently and isn’t moved by it. Sterling is being largely traded on economic realities at present. Is the UK economy swinging from the rafters compared to other EU economies? No. Is the UK economy improving? Yes. Will Philip Hammond, the Chancellor of the Exchequer, say anything riveting or implement any new policies tomorrow? Unlikely. What he will communicate is that productivity and public finances have improved with borrowing less than expected for the fiscal year. I expect a short-term bounce in GBP tomorrow. Please contact the trading department to discuss technical levels should you have a requirement for Euro’s from Sterling.

If you need to convert Euro’s back to Sterling consider covering off a large proportion of your requirements at current levels on SPOT. We have traded over 1.14 recently so if you can achieve anything around or under 1.13 I would consider this a good level to secure. Might we fall further? Yes. However, look at things on a historical basis. Trading at 1.20/0.833 – 1.25/0.80 on GBP/EUR or the inverse EUR/GBP used to be considered ‘fair value’.  

Please contact the trading department to discuss your individual requirements.

Sterling/Dollar

I expect Cable (GBP/USD) to push back above 1.40 the figure. If you are holding USD and need Sterling look at securing at current levels. Today there isn’t much data out so I expect trading to be range bound. Please contact the trading department for pricing. We had the NFP (Non-Farm Payroll) figure released on Friday that massively smashed expectations of a forecast of 200K with a print of 313K. However, the Dollar didn’t gain too much impetus with some of the details within the report on wage growth raising some questions around inflation.

Please do consider utilising market orders to execute at 1.40 if you have some upcoming USD requirements from GBP. Should we break through this psychological level then we can discuss ‘averaging up’ your FX rate in Q2.

You can view recent movements on Sterling/Dollar on the graph below –

GBP/USD - 1 Week

If you have any questions please feel free to contact me directly.

Have a fantastic week.

Written by Liam Alexander