Did anyone win on the horses at the Grand National this weekend? My punt was Balthazar King and that ended up falling and sustaining broken ribs. Let’s stick with Foreign Exchange and something I have an understanding on. On that note, hate to say I told you so but I told you so.
GBP/USD has broken further to the downside and my forecast of 1.45 in April is coming to fruition. I expect Sterling to come under renewed and more sustained pressure over the next few weeks. With the various political parties expected to up their campaigns, mudslinging and general profile it will create more uncertainty for the Pound. One bank called GBP/USD at 1.35 in May. Whilst I have always maintained that we would hit 1.45 in the run up to the election I think we may have another move lower. Perhaps to around 1.42/1.43. I don’t think we’ll go to 1.35 as 1.40 the figure will be too big a resistance level to break. Post-election? Dependent on the outcome your guess is as good as mine. Answers on a postcard please.
I would suggest the following if you are a USD seller -
Place orders at 1.46/1.4550/1.45 in the run up to the election
If you are a USD buyer it is very much damage limitation until after the election if you haven’t locked into Forward Contracts at higher levels. Please send me an email or get in touch with one of the Aston team and we can implement a strategy for you to protect you from further downside risk and take advantage of any spikes on an intraday basis to the upside.
With EUR/USD pushing lower last week on the back of more USD strength and slight EUR weakness I think we’ll see a nudge higher on GBP/EUR. Don’t expect 1.40 on the pair anytime soon although if you place orders around 1.38/1.3850 the figure I think these are achievable levels to aim for. Please do remember that although EUR is weak and I imagine it weakening slightly further, any bizarre result in the UK general election will increase volatility around Sterling. Please do take this into consideration for your requirements over the coming weeks/month.
UK General Election
I will be putting out a video blog or a ‘vlog’ as the cool kids call it over the coming weeks on the election and what the impact may be for Sterling. I’m sure you will be on the edge of your seats for that one. If you have any particular points/questions you would like me to cover off please do let me know in advance and I’ll do my best to answer them.
What do we have out this week in the form of data?
· Tuesday - Inflation data out in the form of CPI figures from the UK followed by Retail
· Wednesday – ECB Monetary Policy Statement and Press Conference
· Friday – CPI data from the Eurozone followed by CPI data and the Reuters Michigan Sentiment Index out of the US.
If you have any upcoming requirements to cover off now we are at the start of Q2 please let myself or one of the trading team at Aston know.
Have a great week.
Written by Liam Alexander