Where now for GBP/USD? We bounced off a 32 month low around the 1.4865 level after gaining further momentum to the downside sub 1.49 before a relief rally as buyers re-entered the market and pushed it back to the 1.4890 level. My medium term outlook is for GBP/USD to continue the downward trend and target the psychological level of 1.45. If you’re a buyer of USD from GBP I’d look at staggering your rate at key intervals on bounces to the upside. Is the rate great to buy USD at the moment? No. If you have a requirement for USD over the coming weeks if you can secure anywhere around the 1.4950/1.5000 level I’d consider that ‘good value’ in current market conditions. Contact your ACM trader to discuss implementing a strategy on a spot or market order basis.The market is taking somewhat of a breather today and trades in a consolidative mode after the strong NFP figure on Friday. The GBP/USD move lower is mainly Sterling price action. I don’t see any great resistance to further downside moves and I’d look at a target price of 1.45 on the three month.
EUR/USD? Suffice to say we’re still hanging around the 1.30 level with no clear move of any conviction in either direction. I’d rather it move sharply either way as, quite frankly, it’s becoming dull. 1.2950 is looking like a strong resistance level and we’ll need a clear break below to hold it to the downside. I’m bearish on EUR/USD. Recent months and ‘improvement’ in the Eurozone has calmed market jitters on the collapse of the single currency. However, I still don’t see the fundamentals of the single currency being anything other than one move away from disaster again. Italy will be interesting to look at over the coming weeks.
GBP/EUR continues its downward momentum on the back of continued GBP weakness. The dizzying heights of 1.20 seem a long time ago now. If you have EUR sell requirement ‘locking in’ around these levels is good value. Although I do see a continued bearish tone on this currency pair look to stagger your sell of EUR at 50 pip intervals to manage your exchange risk. Contact me to discuss implementing a trading strategy for your FX exposure.
In terms of data out this week the main events are CPI (MoM) and (YoY) out of Germany on Tuesday followed by Retail Sales (MoM) Feb out of the US on Wednesday.
On Thursday we have the Australian unemployment rate out and then attention turns to Switzerland with the SNB Interest rate decision and press conference. Turning our attention to the US on Thursday afternoon we have inflation data out in the form of PPI (YoY) (Feb). Rounding off the data for the week on Friday is CPI data out of the Eurozone with the US following suit in the afternoon with the release of CPI (MoM) (Feb).
The Brazilian Real dropped from a 10 month high after Central Bank intervention and the sale of 1 billion of reverse Foreign exchange swaps to weaken the currency. The BRL has gained just under 5% over the past 12 months making it the best performing currency among 25 Emerging Market currencies. If you need to convert GBP or USD into BRL please contact a member of the ACM team to discuss structuring this. We are one of the only companies in the UK with the capability and expertise to execute these deals.
With regards to the South African Rand (ZAR) we may see further pressure on the currency over the coming week with the release of the current account data on Tuesday (12/03/13). This may set a negative outlook for the remainder of the week with concerns growing on the strength of the economy after the release of the poor deficit figures in February. We also have manufacturing data and retail sales out this week that the markets will be keeping a close eye on.
ACM are one of the only companies in the UK that can structure the sale of Rand (ZAR) and manage the flow of funds. If you’d like to discuss how to implement a sale of ZAR please contact ACM to discuss how to structure this trade.
ACM welcome your interaction so if there is anything you agree or disagree with please contact us. Also, I’d like to hear your one month predictions on GBP/EUR and GBP/USD. Closest to the rate on both currency pairs will receive a bottle of something of their choice.
As always, a member of the ACM team is on hand to answer any questions or queries you may have.
Have a great week
Written by Liam Alexander
Any views expressed in this news item are to be considered solely as the opinions of the author and not as statements of fact. The author does NOT claim to be able to predict the future direction of foreign exchange rates with any certainty and any views expressed in this item should NOT be relied upon in deciding to buy or sell any currency nor should they be regarded as an inducement to buy or sell any currency.