The US Dollar is wobbling like a punch drunk boxer, reeling more from political blows than economic. Sterling/Dollar has sustained the recent upside move and is testing 1.42 the figure. Will we keep this momentum or will we retrace back below 1.40? GDP Q4 data out on Wednesday from the US will give us some direction this week.
Sterling gained last week on the back of the transition deal announcement with the EU. That should give Sterling some respite from Brexit related headlines for a while. The unemployment rate also fell back to 4.3% in the UK.
Sterling is going into Q2 on the front foot.
You can view the movements last week on Cable (Sterling/Dollar) on the graph below –
GBP/USD - 1 Week
If you have a USD requirement from Sterling do consider locking in some of the recent gains at current levels on a SPOT basis or a short-dated forward contract. As we so often say, doing nothing is speculating. Take some risk off the table. Please contact the trading department for rates of exchange.
Will the UK raise rates in May? Most likely. Will Sterling move higher against the US Dollar in Q2? We are at strong levels now although I do see us moving up to 1.43 with a potential test of 1.45 in May. Whilst I would suggest covering off a portion of your exposure now to take advantage of recent moves I would also leave some room to take advantage of any further upside.
Sterling is on a fairly strong footing at the moment having had better than expected Retail Sales last week in addition to good employment figures. Consider implementing market orders at 1.43/1.44 and 1.45 for Q2. To discuss technical levels to aim for please get in touch with the trading department and they can structure these orders for you.
The US Dollar is on the back foot despite the Federal Reserve raising rates by 25bps to 1.75% last week. The outlook for the US economy is positive although there is the small matter of a potential trade war with China giving a selling bias to the Dollar at present. It looks pretty ‘Stormy’ out there for the Dollar at the moment.
If you have a USD/GBP exposure can you afford the rate to potentially challenge 1.45 the figure? Take some risk off the table and give yourself a price point to work from. We can then discuss a specific strategy for you in Q2 to manage some of the undoubted turbulence that will be played out. Feel free to contact me directly to discuss in more detail.
We challenged the dizzying heights of 1.15 last week after a strong move to the upside.
You can view the movements on the graph below –
GBP/EUR - 1 Week
We have given up some of the gains and we’re now trading in a tight range. I don’t expect too much volatility this week heading into the Easter break as we have limited data releases.
If you need to purchase EUR from GBP lock in some of the gains. We were trading in the 1.11’s not too long ago. Is there room to push higher? We will need to see a sustained break above the 1.15 level to justify any strong upside bias. Please contact the trading department for a SPOT rate.
Selling Euro’s? Whilst historically you are still at competitive levels consider market orders around 1.1450/1.14 to take advantage of any retracement of last week’s move.
We have a fairly quiet week on the data front. Q4 GDP figures out of the US will be the release most investors and traders look for this week.
If you have any questions please do get in touch.
Have a fantastic week.
Written by Liam Alexander