Where now for GBP/USD? As I stated previously I think we’re towards the top of the range on cable. I think we’ll see a retracement on GBP/USD with an end of month forecast of 1.55 looking fairly accurate. If you can buy forward at 1.5550 or above I think this represents good value in the current market.We’re pretty thin on the ground for data today with the only figures of note being the Chinese CPI (MoM) (Aug) and Swiss Unemployment Rate (MoM) (Aug) coming in at 0.5% and 3.2% respectively. Wednesday/Thursday and Friday is when we’ll see some increased volatility on the major currencies as we have a raft of data out. I won’t bore you with all the data however the main data releases to look out for are –

Wed – UK Claimant Count Change (Aug)/UK ILO Unemployment Rate (3M) July

Thurs – ECB Monthly Report/UK Inflation Report Hearings

Friday – Attention turns to the US – Retail Sales (MoM) (Aug)/Michigan Consumer Sentiment Index

I don’t foresee much movement until Wednesday morning on GBP/USD and GBP/EUR. I’d suggest it may be worthwhile contacting your trader to discuss a strategy for the latter part of the week. If you’re a USD buyer from GBP look to put in a market order around the 1.5650 level to execute should the UK data be positive. If you’re a USD seller to GBP look to stagger your orders at 1.5620 and then 1.56 the figure. By utilising orders rather than simple ‘Spot’ transactions you give yourself more scope to the upside on an intraday basis. You can also protect your risk with a stop loss. Feel free to contact myself or one of the team should you wish this to be explained in more detail.

GBP/EUR? My outlook for this week is that we’ll see GBP/EUR try to break new highs however there will be resistance levels to overcome with 1.19 the figure being a psychological level to push through. I’d expect we’ll have a few attempts with us hitting the figure then retracing back 25/30 pips only to try and test it again. If you haven’t got orders in at 1.1870/1.1880 and 1.19 the figure it may be an idea to look at placing these in the market as I do think we’ve every opportunity of pushing back to the hallowed ground of 1.20 in the not too distant future.

Reason for optimism? Simply the EUR is overvalued and we have GDP out of Italy released tomorrow which I expect to be below expectations creating more EUR weakness. Is the UK economy doing great? Of course not. We’re still so far from being out of the woods no matter what the powers that be say, however we are in a far better position than our European counterparts. Our GDP figures have been revised to the upside and we could see 1% growth for the end of Q3. I think that’s a little optimistic although the signs are there that we are finally seeing some positive movement.

EUR/USD? I expect this to retrace as I suggested previously with 1.3250 being toppish. We may have a push upwards however I’d expect us to be around 1.30 or just below by end of September. EUR/USD is rather dull to say the least and I expect the monotonous range bound activity to continue. Exciting stuff it is not.

Are there any other currencies you would like discussed or more detailed information on? Happy to provide. Please let one of the team know and we’ll be happy to incorporate that in for you.

Have a great week

Written by Liam Alexander