How are those New Year resolutions going? Yup, thought so. Well, at least you’re not in Francois Hollande’s shoes. What a superb start to the year he is having. Anyway, I digress. Back to the currency markets. GBP/USD has had a little jump higher this morning on the back of better than expected Retail Sales figures out the UK. UK data is proving quite robust at the moment hence Sterling continuing to be at these levels. Do I think Sterling will continue to climb against the US Dollar? In a word, no. We’ll see US Dollar strength this year with the effects of tapering giving a boost to the US. I would expect us to be back under the 1.60 level by end of Q1. If you are a buyer of USD and can achieve above 1.60 I would suggest that locking in above this level will stand you in good stead over the course of the year. Please contact myself or one of the trading team to discuss implementing either a Forward contract or a Spot trade. Do you think GBP/USD has more in it? If so, look to work a market order and try and catch any spikes on an intraday basis. Please contact our trading team to discuss levels to aim for.GBP/EUR? It still can’t decide if it wants to push through the 1.20 figure and settle above there. If you can achieve 1.20 on GBP/EUR I would look to lock in as much as you can at this rate. History and trends suggest that the upside is limited and a retracement back below the figure is likely. You can of course work an ‘OCO’ and protect your downside risk with a stop loss whilst also working a market order to take advantage of moves should GBP/EUR surpass the dizzying heights of 1.21/1.22 the figure. Please get in touch and we’ll explain this strategy in full and appropriate levels.

The Retail sales figures out this morning were significantly better than market expectations. All those presents bought over the festive period certainly added up this year. The Retail Sales figure is a volume based number so the heavy discounting may have done the trick. Well, perhaps not for Debenhams but that’s another story. Retails Sales (MoM) Dec were forecast at 0.4% and the figure came in at 2.6%. A sizeable increase on expectations. The YoY (Dec) figure was also way above expectations printing 5.3% against a consensus estimate of 2.6%. That was the main data out for today so I would expect the markets to be less volatile this afternoon. We have some housing data out of the US at 13.30 (UK Time) and the Reuters/Michigan Consumer Sentiment Index however they’re tier two data so I wouldn’t expect those releases to shift the direction of the market much.

If you have any questions please let myself or one of the trading team know.

Have a fantastic weekend

Written by Liam Alexander.