The World Cup is over for another four years. Wimbledon is over for another year. Unfortunately Love Island continues to insult and decimate the IQ level of normally sane UK viewers. When does the pain end? Who knows.

The whole Brexit process is on a par with the pain and suffering that Love Island ‘entertains’ us with. It seems we are on for a ‘soft Brexit’ now. This should aid Sterling, in theory. However, today we have the most recent Brexit strategy under scrutiny in Parliament. If there any changes to the proposal? Well, it weakens the UK’s positioning power further with the EU. Should Theresa May’s proposal be voted for then Sterling should rally. 

Sterling is fairly range bound to kick off with this week as there’s no data of note out the UK today other than the vote in Parliament. 

You can view the movements over the past week on Sterling/Euro on the graph below – 

GDP/EUR - 1 Week

Sterling/Euro has been trading in a range of 1.11 – 1.14 for what seems longer than the last time Scotland reached a major football tournament (1998 for those of you that may be intrigued). If you are purchasing Euro’s from Sterling take advantage of the recent ‘spike’ in GBP/EUR. I use the term ‘spike’ tentatively. We were nestled in the mid 1.1250’s for part of last week. I would suggest utilising market orders at 1.13/1.1350. This is a realistic level to aim for. Please contact a member of the trading department to implement an order. This week data wise out of the Eurozone we have inflation data out on Wednesday in the form of CPI (Consumer Price Index) (YoY) (Jun). Other than that, this week is extremely light out of Europe. Any price movements on GBP/EUR will be likely dictated by Brexit related headlines in either the UK or Eurozone.

Sterling/Dollar

We had Retail Sales data out of the US today that were mixed. Other than the alpha male meeting of Trump/Putin there is little to report on. The Sterling focus this week will be centred around Bank of England Governor Mark Carney’s speech on Tuesday and Average Earnings out of the UK. We also have the ILO (Unemployment Rate) (3M) (May) released.  Expectations are for a print of 4.2%. We also have inflation data from the UK out on Wednesday in the form of Consumer Price Index (CPI) (YoY) (Jun). Consensus print is for 2.6%. There will be volatility surrounding Sterling on this release so please get in touch with the trading department if you have any Cable (GBP/USD) requirements.

Sterling/Dollar has been trading between mid-1.30s and just under 1.3350 over the past month. 

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

GBP/USD - 1 Week

INSERT GBP/USD GRAPH

We’re currently towards the higher end of this range. If you have a requirement to purchase Dollars please consider locking in some of your exposure on a SPOT basis. Consider placing a market order towards 1.3350 as dependent on how Sterling performs and the market perceives the dollar and ongoing trade war concerns there may be an opportunity. However, I would add, that I don’t see Sterling/Dollar pushing too much higher over the summer.

If you need to sell Dollars back to GBP consider taking advantage of current rates.  The low on a 12 month basis is around 1.28. Might we push a few percentage points lower? Perhaps. However, if you’re holding any Dollars I would seriously consider locking in a significant amount on a SPOT basis or alternatively a Forward Contract out for 3, 6 or 12 months. This provides you with protection and peace of mind short/medium and long term irrespective how the Brexit negotiations go. Please contact the trading department to discuss your individual requirements.

If you have any questions or would like to schedule a call please get in touch directly.

Have a fantastic week.

Written by Liam Alexander