The EUR fell to a fresh 3 month low last Wednesday after some downbeat German jobs data. The ECB and the single currency will take centre stage this week on Thursday with Mario Draghi, the ECB president, expected to put in place their measure of QE to combat deflationary pressures. Will the EUR weaken further? Most of the move will have been priced in already however I expect short term EUR weakness around the statement although I expect once the market has digested the news the EUR will rebound and we’ll be back to similar levels. The expected EUR weakness should provide a good opportunity for EUR buyers from GBP. If you have a EUR exposure this week look at placing market orders at various levels to catch any spikes on an intraday basis. Please contact myself or one of the trading team to discuss implementing market orders at the appropriate levels.EUR/USD has now dropped significantly after trying and failing to break the psychological level of 1.40. I believe we’re starting to see a shift in market sentiment and as suggested in Q2, Q3 is when we’ll see a sustained shift in market sentiment and I expect the recent downtrend to continue on EUR/USD. I expect EUR/USD to be under 1.30 by the end of Q3.

The main data and market events come at the end of the week with the ECB meeting on Thursday followed by Non-Farm Data released on Friday from the US. The Bank of England Interest rate decision is released on Thursday however it is pretty much a non-event due to the forward guidance policy of Mark Carney.

In the run up to these data releases we have CPI data out of the Eurozone tomorrow that will have an effect on the single currency. Wednesday we have GDP data out of the Eurozone so we may see the single currency weaker before we get to Thursday. I would suggest if you’re a EUR buyer to have orders staggered at different levels to take advantage this week

GBP/USD has settled into some range bound activity and we’re not seeing a sustained break higher. Do I think we’ll break 1.70? No, I think it is too big a resistance level to break and I expect some US Dollar strength to come into play that will outweigh any upside on Sterling. Friday will be interesting on the US Dollar front with both Non-Farm Payrolls released along with the Unemployment rate.

At these levels GBP/USD is looking attractive to purchase on Spot and also on a Forward Contract basis. Please contact our Head of Trading to discuss.

In addition, please contact us to have a full discussion on your strategy for the summer months.

Have a great week.

Written by Liam Alexander