Theresa May, like a raft in the Caspian sea looking for land, has a few days to get there. Land being the third meaningful vote. Will she get the support of the DUP (Democratic Unionist Party) and will that translate to some Brexiters switching their vote (the magic number is 75) in support of the PM’s deal? Time, a diminishing commodity for the Prime Minister, will tell.

What is almost certain now is that the UK won’t be leaving the EU on 29th March. Roll on more uncertainty. Will we ever leave the EU? We can live in hope we’ll have some clarity at some stage as this is becoming the longest running dark comedy ever aired.

Sterling has been buoyed with the threat of No deal being taken off the table. You can view the moves on Cable (Sterling/Dollar) on the graph below –

GBP/USD - 1 Week

GBP/USD - 1 Week

The top of the market has been around 1.33 the figure although we have drifted off in the European session to around 1.3250. If you have any USD requirements from Sterling I would suggest covering off at current levels. If you would like a SPOT rate please contact the trading department for a rate of exchange.

This week, in addition to the never-ending political noise, is a busy week on the data front. We have the UK ILO Unemployment Rate (3M) (Jan) out on Tuesday followed by Average Earnings Excluding Bonus (3 Mo/Yr) (Jan). On Wednesday we have inflation data out in the form of Consumer Price Index (YoY) (Feb) followed by the Fed’s Monetary Policy Statement/Interest rate decision/Press conference. We have the small matter of the UK Parliamentary Vote that day too. On Thursday we have the Bank of England Interest rate decision which is likely to be a non-event.

If Theresa May manages to somehow get her deal through then Sterling should rally higher, perhaps significantly. Consider implementing take profit orders to take advantage of any spikes in the market over the coming weeks. Please contact the trading department to discuss technical levels.

In terms of GBP/EUR, we rallied to just under 1.1750 although we have since given up some of those gains.

You can view some of the recent movements on the graph below –

GBP/EUR - 1 Week

GBP/EUR - 1 Week

If you need to purchase EUR from Sterling take advantage of the recent moves in your favour. Please contact the trading department for both SPOT and Forward rates. Might Sterling/Euro push higher still? Quite possibly. Consider implementing take profit orders to the upside to take advantage of any significant intraday movements in your favour. Again, please contact the trading department to discuss technical levels. Selling EUR/GBP? Evidently it’s not the best time to do so although consider implementing take profit orders should we see more uncertainty and mudslinging around UK politics that may impact the direction on Sterling.

It is worthwhile discussing your current positions and Q2 exposure with us as levels may be markedly different in a few weeks’ time. Feel free to contact me directly to discuss.

Have a fantastic week.

Written by Liam Alexander

written by

Liam Alexander

Liam Alexander is the CCO at Aston Currency Management.