Where to kick things off? Let’s start with the ECB press conference last week. I must say, it was the most entertaining one I’ve watched in a long time. Yes, the content was interesting although the protestor doing a jump a super hero would have been proud of and then throwing what looked like wedding confetti on Mario Draghi was bizarre to say the least. What these ‘protesters’ hope to achieve is beyond me. I think they just need a hug.
Onto the Greek situation and the question of ‘will they won’t they’ is still with us. Will Greece and its creditors reach an agreement at the Euro Area Finance Ministers on April 24th? Mario Draghi said over the weekend that financial buffers were sufficient to prevent contagion in the event of a Greek exit. He did say we would be in ‘uncharted waters’ if Greece did leave. So, to sum up, no new commentary whatsoever on the situation.
We are very light on data this week with the Eurogroup meeting on Friday being the main event. I’d expect GBP/EUR to trade between 1.38-1.3950/1.40 this week. I think this will be the last jump you’ll see on GBP/EUR for a while as I do maintain Sterling is going to come under pressure beginning of May. With the political makeup unknown from May 8th onwards and no doubt deals being done in the run up and after 7th May Sterling will come off. If you are a buyer of EUR I would implement Market orders at 1.3850/1.39 and at a push 1.40. Everyone has said EUR is going to plummet further against the US Dollar but I’m not buying that. All this talk of parity won’t materialise. I would suggest it may be an idea to take advantage of these levels on GBP/EUR. Please contact myself or one of the trading team to implement a market order or book on Spot/Forward Contract.
Things have got interesting on Cable. With EUR/USD pushing back up to around 1.08 on the back of a succession of poor data out of the US last week (retail sales figures/CPI etc) this has dragged GBP/USD back to recent highs. If you’re a USD buyer I would consider locking in some on a SPOT basis over the coming weeks. The rate is far from fantastic although I expect the rate to be much worse in the run up to the election. We got into the 1.45s over the last 10 days and I’d estimate we’ll trade around 1.45 perhaps even pushing down to 1.42 in the run up to the election. If you’re a seller of USD please do get in touch and stagger orders to the downside to take advantage of moves lower.
I would suggest beginning to think about a strategy for May and the summer months as you may well see far greater volatility from 1st May with the UK general election coming up. It is best to have protection in place to the downside whilst allowing yourself potential to gain from upside moves.
Not much to discuss on the data front as alluded to above this week.
Have a great week and any questions please do let me know.