Sterling/Euro continues the ascendency. Will the upward trajectory continue or will it come crashing down to earth like a Z list celebrity’s diet and career?

You can view the movements on Sterling/Euro on the graph below -

GBP/EUR 1 Week

Sterling is finally taking a break from the emotion of Brexit related headlines. This should see price action move more on economic fundamentals once again. If you have a requirement to purchase Euro’s from GBP consider locking in some of the recent gains. Please contact the trading department for a rate of exchange to cover a percentage off on a SPOT basis.

Sterling is starting to break out of a range and I see GBP/EUR pushing slightly higher in upcoming trade. As detailed last week, the EUR had strong growth in 2017 although I don’t see that momentum continuing this year. Indeed, there will likely be more of a pronounced divergence in interest rates this year as the UK and US look set to raise rates further. This could see a slight downside bias and sell off of the Euro. In upcoming trade we have a sentiment survey out of Germany this week in the form of the ZEW survey. That is expected to have a negative bias. This will likely weigh on the single currency. To this end, consider implementing market orders to the upside to take advantage of any intraday movements. Please contact the trading department to discuss technical levels.

Sterling/Dollar

Cable (GBP/USD) has broken through 1.43 the figure.

You can view the movements on the graph below – 

GBP/USD - 1 Week

Dollar weakness has dragged the pair higher after a mixed Retail Sales report out of the US today. I expect this move to the upside to continue and a break above 1.44 looks likely. If you have a requirement to purchase some USD take advantage of the recent moves and take some risk off the table. We were trading under 1.40 not so long ago. The market has largely shrugged off many of the recent geopolitical tensions. However, this could of course change dramatically dependent on how things play out in the form of airstrikes, politics and sanctions. Feel free to contact the trading department or get in touch with me directly to discuss your upcoming requirements. 

If you have a requirement to sell USD look at giving yourself a price point to work form on a SPOT basis. I do think we’re going to push higher so if you can achieve under 1.45 look at locking that in. If we start to see GBP/USD retrace then take advantage of this move with a series of market orders. If you would like a member of the trading department to get in touch with you directly please let me know.

This week we have some key data out of the UK.  To kick things off, we have employment data out of the UK on Tuesday in the form of the ILO Unemployment Rate (3M) (Feb) and the Claimant Count Change and rate (March). We have inflation data out on Wednesday in the form of Consumer Price Index (YoY) (March). Consensus is for a print of 2.6%. I don’t expect us to be far off this so any market reaction around this is likely to be limited. Sterling, I believe, will continue to move higher with talk of the Bank of England (BoE) hiking rates next month.

Q2 is now firmly underway and the FX landscape is going to shift this year. Please make sure you have a strategy in place to mitigate your currency risk. 

If you have any questions please do let me know. 

Have a fantastic week

Written by Liam Alexander