Well done to all those who took part in the London marathon on Sunday or had people they knew competing. Also, a well done to those who watched it on TV. I count myself in the latter.
I should start off by discussing Greece/the Grexit/bailout plans but quite frankly I’m bored writing about it. Greece will look down the back of the couch and find the required money to struggle through May and perhaps June. No doubt a compromise will only be reached when Greece has its last penny so we’ll need to endure more to and fro over the coming months. Yawn. My remarks may seem flippant but after near on 7 years I think they’re entitled to be.
So, what will that do to the EUR over the coming months? We’ll have a yo-yo effect on the single currency. We’ll have a relief rally when Greece makes payment then uncertainty in the run up to the next one, and so on. Parity on EUR/USD? I think I’m one of the few that thinks that’s extremely unlikely. If a Grexit does indeed occur then one could argue that may actually be a positive for the Eurozone and the single currency. Would it be such a disaster that couldn’t be managed now buffers are in place to stem the tide of contagion? Of course, there will be noises from Spain/Portugal and Ireland should debts be written off so that’s why I think a deal will be fudged together to prolong the agony for all concerned.
GBP has rallied against USD over the past week coupled with a raft of poor data from the US calendar. I’d suggest if you are a buyer of USD from GBP look at locking in around current levels over the next week or so prior to the run up to the election. I do expect Sterling to fall and as I’ve said numerous times before, doing nothing is speculating. Please contact myself or one of the trading team to discuss a strategy prior to the beginning of May.
We’ve had a nice bounce on GBP/EUR over the past week or so. We’ve danced and flirted with 1.40 the figure. As expected there was a lot of resistance around this area and we’ve had a pullback. If you have an upcoming EUR requirement I would stagger orders at 1.3950 and dependent on your time line place orders at 1.40. Please email me or one of the trading team and we’ll implement these for you.
Focus will turn to the Federal Reserve on Wednesday that will provide us with a snapshot of first quarter growth in the US. We’ll have a final GDP figure released from the UK prior to the election on Tuesday. Expect figures to be scrutinized by the opposition parties in the run up to May 7th. Other than that we have some CPI and unemployment data out of the Eurozone and Germany respectively. I’d expect some range bound trading to occur at the start of the week with some wider volatility from Wednesday onwards.
If you have any questions please do let me know.
Have a great week
Written by Liam Alexander