Sterling is holding against the US Dollar. Will it continue? I believe so. However, it will be at a pace akin to that of after Christmas dinner. Slow and somewhat unsteady. With GBP/USD at such elevated levels (best since 2011) have you secured your USD on a Forward contract or market order basis? It may be time to do so. If you can secure 50-75% of your Q1 exposure then you have given yourself one less headache going into the New Year. A number of companies will have their costed levels below or at 1.60. As we can achieve higher than that for you at the moment you are in effect locking in a currency profit for Q1 next year. Do you think the rate is going to move higher? If so you can utilise a market order to take advantage of any spikes on an intraday basis over the coming month. Please contact myself or one of the trading team to discuss appropriate levels to try and take advantage of.If you are unsure as to what is the best strategy to put in place for Q1 next year please do get in touch and we can discuss on an individual basis. It may be that a mixture of spot/forward contracts and market orders will best serve your needs.
What data do we have out this week?
We have Bank of England Governor Mark Carney speaking early evening (UK time) so we should see some volatility around GBP today. Tomorrow we have trade balance and some manufacturing data out of the UK with the most important part of data out being the NIESR GDP estimate (3M) (Nov). The beginning of the week will be focused on Sterling so if you think we're going to see some spikes higher then please contact us to implement market orders.
Thursday focus switches to the US with the release of Retail Sales and jobless claims.
Sterling could be open to a downward move dependent on data releases this week so I would take the risk adverse approach and if you have a USD exposure look to cover it off.
GBP/EUR? We've surprise surprise settled back below the 1.20 figure. After its dalliance with the 1.20 level then pushing upwards we've had a retracement with EUR proving to be a currency of choice for investors at present. With the USD being so weak it's a case of nowhere else to go. Expect to see a gradual strengthening of the EUR in the next week or so. I do still believe that we'll be back above the 1.20 level so I would suggest placing an order firstly at 1.1950 and then the 1.20 level to secure some of your EUR exposure.
If you're a seller of EUR against GBP put orders in the market as dependent on speeches and data this week we may see some dips on GBP/EUR giving you an opportunity to take advantage before we see GBP/EUR on the ascendency again.
Please contact myself or a member of the trading team with any questions you may have.
If you're in Knightsbridge shopping over the next week or two then let one of us know and we would be happy to grab a coffee.
Have a great week.
Written by Liam Alexander.