What a great weekend. Barcelona won the Champions League, some Swiss guy with a name no-one could pronounce beat Djokovic to the French Open Title and the rumblings from Greece and the G7 continue. I was glued to my seat. I’m sure you can determine which one it wasn’t.

GBP/USD

GBP/USD up or down? I think you know my thoughts by now. I’ve been bearish on Cable for a long time even when everyone was calling us back to 1.60 the figure and beyond. I expect a further retracement this week and in the coming weeks to test 1.50 and then a push below. After better than expected NFP (Non-Farm payroll) figures on Friday out of the US that were the strongest this year this will give USD a further boost in my opinion. Will there be a rate hike from the Federal Reserve in August? It certainly looks more likely. Some are calling it next month although I think this is somewhat premature. August perhaps although I think September is more likely. Will that strengthen the US dollar? It’s about as obvious as Barcelona winning the Champions League. Read into that pretty obvious. How does that impact you if you are USD buyer? I would look at Retail Sales released this Thursday as being the biggest USD move this week. If we get a positive figure this will accelerate the downside move on GBP/USD.

Please get in touch with myself or a member of the Aston team to discuss strategies over the summer months. There will be less liquidity in the markets come July due to investors/traders sunning themselves which may relate to more volatility.

If you are a seller of USD into GBP you may want to implement market orders to take advantage of a potential move lower. If you have an upcoming requirement please get in touch and we’ll implement orders at an appropriate level for you.

·         Range this week – 1.50-1.53 with a bias to the downside

GBP/EUR

As I’ve suggested previously I thought the move above 1.40 would be short lived. Indeed, my end of year call of 1.32 remains. We are now in that no man’s land between 1.35 and 1.40. I would suggest we’ll be range bound and bounce between 1.36 and 1.39 this week. Of course, dependent on the Greece conversation we may see some enhanced volatility. Eleventh hour deal by end of July? I’d suggest probably so. EUR strength on the back of it? Most likely. GBP/EUR end of month? Slightly lower than current levels. Are you a EUR buyer? If so, I’d suggest placing an order to the upside to take advantage of any market and intraday moves otherwise I’d look at covering off your EUR exposure on a Spot basis.

If you are a EUR seller into GBP now may be the time to consider implementing orders to the downside. Granted, it hasn’t been too attractive of late. Above 1.40 no thanks. Now we are pushing lower it may be wise to convert a small percentage of your EUR exposure into GBP at current levels and then look at a higher percentage at better than Spot levels. Doing nothing is speculating. It is always best to have a strategy and execution plan in place. Please contact myself or one of the trading team to discuss relevant orders.

·         Range this week – 1.36 to 1.39

Data

We have a very light week data wise. The main things to look out for –

·         Tuesday we have Inflation report hearings out of the UK followed by GDP figures (YoY) (Q1) out of the Eurozone.

·         Thursday we turn attention to our friends across the pond and look at the Retail Sales figures (MoM) (May)

Have a great week and any questions on any of your requirements please get in touch.

Written by Liam Alexander