Where now for GBP/USD? We hit lows of 1.5204 on Wednesday morning prior to the Bank of England Governor Mark Carney’s speech. Cable (GBP/USD) rose to highs (1.5531) not seen since June on reforms of monetary policy. Growth figures were revised to the upside and he was careful not to talk Sterling down. This coupled with his statement that rates are to remain low until the unemployment figure hits 7% from current 7.8% gave buoyancy to our dear old friend Sterling. Great for borrowers less so for savers. So, can GBP maintain its upward move? Short-term I think we’ll see the trend continue with a bout of Sterling strength, however over the coming weeks I think we’ll see Sterling lose some of its lustre as the growth figures look wildly optimistic to me. I think it will be a case of “Oh wait, we’re not actually doing quite as well as we thought”. The past few days has seen dollar weakness across the board and I don’t think this is down to any real shift in sentiment; more to do with reports that the economies of the UK, Europe, and China are stabilising. The US dollar has been the worst performing currency (second only to AUD) and has lost 3.5% in the past month.Are you a buyer of USD from GBP? If so, I would look to offset some of your exposure at levels around 1.55. We’re around the highs of the past few months. Either look at securing some on a spot basis or look to work a take profit order around 1.5550 to take advantage of any spikes on an intraday basis. Please contact your trader to discuss.

If you’re a USD seller back into GBP now would be the time to look at placing market orders around the 1.55/1.5450 mark as over the coming weeks I think we’ll see a retracement on GBP/USD. Currency markets can move over 200 pips in a matter of minutes as we’ve seen this week so it’s best to have a strategy in place for your exposure to maximise any movements and protect against downside risk. You can either contact myself or one of our traders and we’ll be happy to discuss your individual requirements in greater detail.

GBP/EUR? We’re reaching the dizzy heights of 1.16 again. GBP/EUR has become rather dull in all honesty with it trading in a tight range between 1.1450-1.18 since the end of January. I think it will be quite a while before we see a spike to previous levels of 1.20. I would look to ‘average up’ your rate and lock in some of your exposure around 1.1550/1.16 with orders placed at 1.1650 should we see a bout of EUR weakness coupled with GBP strength.

Today is quite light in terms of data. We’ve had lower tier UK data out in the form of Trade Balance (Jun) that came in positive and above consensus.

Next week there is a lot of data out with Wednesday being key from a UK perspective. We have GDP figures out of Japan late Sunday night (UK time) followed by the BoJ minutes on Monday. Tuesday we have CPI data out of the Eurozone and UK followed by Retail figures out of the US in the afternoon. Wednesday we have Bank of England Minutes, the MPC vote and Claimant Count change in the UK. This is followed by GDP out of the Eurozone. Thursday we have CPI data out of the US and rounding off the week we have CPI data out of the Eurozone.

As you can see from the above there is likely to be a lot of volatility next week with the above data impacting heavily on GBP/EUR, GBP/USD and EUR/USD. Please contact your trader to discuss next week and any requirements you may have so we can secure the best rate at the best possible time for you.

Have a great weekend

Written by Liam Alexander