Goodbye summer. Did we have it? I must have missed it. Dust off the overcoats as they’ll be required shortly. At least the Rugby World Cup commences soon and we can console ourselves in a warm pub with a pint/glass of red.

GBP/USD

The US Dollar gained towards the end of last week and pushed Cable lower. I’d expect the downtrend to continue with a few spikes on an intraday basis. We are fairly light on data from the US this week so we will be focusing on UK data and releases being the main drivers in the market. If you are a USD buyer evidently it isn’t a great time to purchase USD. However, if we are under 1.50 by year end how does this affect you? Is this below your costed level? Please contact myself or one of the team to discuss a strategy for Q4.

Do you have USD that needs to be converted back to Sterling or Euro? You are at good levels now to consider converting some if not all of your exposure. GBP/USD pushed up to a tad under 1.58 after ‘Black Monday’ two weeks ago so you’re around 3% better off now. I would consider executing some on a SPOT basis and should you think Cable goes lower (which I do) then look at staggering market orders at 1.53/1.5250 and 1.52. Please contact myself or the trading team to discuss implementing market orders.

GBP/EUR

Higher lower or somewhere in the middle? I’m sticking with 1.32 on GBP/EUR by year end. I think EUR/USD will probably push up to around 1.15 or thereabouts so that will put pressure on GBP/EUR. Should you look to purchase Euro’s from Sterling? I’d suggest it may be wise to purchase some at current levels. If someone had offered you 1.35 to purchase Euro’s beginning of January last year you would have bought as many as you could. I doubt we’ll see the giddy heights of 1.43 again so I would put 1.40 out the thought process for the time being. Yes, it may be push higher so please do get in touch and we can implement market orders for you should some upside materialise around 1.37 the figure and above. If you are a Euro seller I would look at converting some more of your exposure on SPOT and then place market orders at various levels from 1.3650-1.3550. I think these are achievable short-term.

What data do we have out this week? As mentioned above we’re light on US data so the focus is on Eurozone GDP and turning our attention to BoE minutes, Monetary Policy Statement, UK inflation expectations and the GDP NIESR growth figure (3 Month).

As an aside, we have a number of releases that will affect the commodity currencies (Aussie Dollar and New Zealand Dollar). Should you have an exposure to these currencies it may be prudent to give a member of the Aston team a telephone call.

Have a great week and any questions please do let me know.

Written by Liam Alexander