GBP finally got its date at the movies with EUR and pushed above 1.40 last week. With all holiday romances it came to a predictable conclusion. It unraveled pretty quickly. As suggested last week I thought we’d have a final post-election push higher with a retracement once we’d hit the figure. So it transpired. My 1 month forecast of 1.36-1.38 remains and I think it will be more to the downside than the upper end of this range.

GBP/EUR

If you have a requirement to purchase EUR I would cover off most on SPOT with a small percentage left to utilise through a market order. It may have some spikes on an intraday basis although I think we’ll see GBP/EUR drift lower this week and towards end of the month. Of course, Greece may throw a spanner in the works as they’re now looking down the back of the couch for coins. With deposit’s exiting the Greek banks quicker than English teams in the Champions League I think June will be crunch time. With Banks/lenders accessing and using collateral that is fast running out at the Greek Central Bank to tap more liquidity I expect a conclusion to the Greek situation in mid-June. So, dependent on what the outcome is there will inevitably be volatility on EUR with it likely to come off. I don’t think it will be huge moves either way as the market is more robust than 5 or so years ago. We’ll touch on Greece in greater details at the end of May.

GBP/USD

Due to poor macro data out of the US in recent weeks there’s been a weaker dollar of late hence the shift higher on GBP/USD. Of course, everyone jumped on the back of a 1.60 shout and it may indeed go there medium-long term although I don’t think we’ll see it anytime soon. I’d suggest we’ll see an upward trajectory again in the dollar due to Fed rate hikes being back in the news and a general improvement in the US economy hence my 1 month forecast of 1.53-1.55.

USD buyer? If you can secure above 1.55 I’d suggest that is around fair value at the moment. Please contact myself or one of the trading team to discuss or to execute a SPOT transaction.

Data

The start of the week is rather dull on releases with not much of note out. I wouldn’t expect a lot of movement today/tomorrow. On Wednesday we have the FOMC minutes released. I would implement any market orders prior to Wednesday evening. Please send me an email to discuss appropriate levels if you are a USD buyer or USD seller. Thursday we have Mario Draghi speaking. On Friday we have GDP data out from Germany with BoE Governor Mark Carney speaking to round things off.

If you have any questions please do let me know.

Written by Liam Alexander