What will be the talking point this week? Inflation, interest rates, China, migrant movement, dollar strength, US retail Sales, US Fed interest rate decision, BoJ Monetary Policy Statement, nope – Jeremy Corbyn. This is a substantial shift (to the left) in British politics. The next few months will be interesting to say the least.

Sterling

What has this appointment done to Sterling? Not much at all, for the time being. It is a case of wait and see how things develop. The pound was up against the US Dollar last week with a push above 1.54 the figure on the back of the BoE announcement on Thursday and a generally weaker USD. Will this continue shifting higher? We may see a spike tomorrow. Why? We have inflation data out of the UK and if the headline CPI figure comes in above 0.1% (expectation) then I would suggest we’ll see a sharp move higher in Sterling. This push higher may be short lived however. We have Retail Sales (MoM) (Aug) out of the US on Tuesday afternoon and should this come in above expectations then we’ll revert back to US Dollar strength.

If you have a requirement to convert GBP into USD this week please have an order placed in the market prior to Tuesday morning so you can take advantage of any upside movements should the CPI figure prove robust. Please contact myself or one of the trading team to implement a market order.

US Dollar

I expect US Dollar strength going into Q4. This, in my view, will drag Cable back towards the 1.50 level. We have been stuck in a range for a while with the exception of ‘black Monday’ where GBP/USD pushed up to around 1.58 the figure. The main market event this week is on Thursday and is of course the Fed Interest rate decision, FOMC economic projections, and the monetary policy statement and conference. If you have a USD exposure this week then please do have a strategy in place prior to Thursday. We have a full calendar of data and events this week that will prove volatile for markets and could shift the focus and direction of numerous currencies. What are my thoughts? If you’re a US Dollar buyer lock some in on SPOT prior to Thursday. USD seller? Place market orders to the downside prior to Thursday and look to take advantage of USD strength.

Euro

The Euro is proving resolute. I’m sure it is made of kryptonite. The single currency pushed through 1.13 EUR/USD. I think we may push up to 1.15 the figure on EUR/USD, perhaps a touch higher, going into Q4. Can the Eurozone get much worse? Is now a good time to look at European stocks? Are we at the start of a turnaround? Who knows. However, I think we may see some Euro strength over the coming months. What will that do to GBP/EUR? As I’ve maintained from January I think we’ll finish the year around 1.32 the figure on GBP/EUR. I don’t see a push back up over 1.40. Do you have a requirement to purchase Euro’s? If so, please do consider locking in some of your exposure on a SPOT basis, some through utilising a Forward Contract whilst leaving yourself some upside potential by implementing a market order. Do get in touch to discuss your strategy for Q4.

If you have any questions please do let me know.

Have a great week

Written by Liam Alexander