The US-China trade tensions continue. The US imposed further tariffs on Chinese goods on Friday. Any further escalation in a trade war between the two largest economies in the world won’t do much to help with global economic growth. Couple this with ongoing cross party talks in the UK that will likely reach an insurmountable impasse in the coming days and it could be a long summer. Longer than Ole Gunnar Solskjaer’s? Perhaps not.
Sterling this morning has been as flat as the atmosphere at Old Trafford yesterday. Sterling is trading sideways at the moment. Cable (Sterling/Dollar) is trading around 1.30 the figure without any clear indication on a break lower or higher. You can view the recent movements on the graph below -
The main drivers around Sterling this week will continue, as always, around politics. We do have the ILO Unemployment rate (3M) March released tomorrow. A print of 3.9% is expected. This may give Sterling a shot in the arm if we see a number above expectations. I expect Sterling/Dollar to continue to trade in the 1.29-1.33 range for the foreseeable future. Once we have some kind of resolution on the UK’s next steps around Brexit then this may give us some clarity. If you are holding USD I would consider executing some on SPOT into GBP at current levels. I would also look to stagger some take profit orders to the downside to take advantage on any further falls in Cable (GBP/USD). Try and average up your exchange rate through market orders. Please contact the trading department to discuss technical levels to aim for.
If you need to purchase USD from Sterling consider a stop loss to protect against any adverse movements over the summer months. Consider this as a ‘worst case scenario’ level. I would also couple this with take profit orders to the upside to take advantage of any Dollar weakness. Again, please contact the trading department to discuss resistance levels we will need to break through on the upside. There is very little data out from the US this week so we are likely to see some range bound trading.
On Sterling/Euro we are trading under 1.16 the figure. If you are selling EUR consider taking advantage of the recent retracement on GBP/EUR. In terms of data, we have the ZEW survey released from Germany tomorrow. On Wednesday we have preliminary GDP (QoQ) (Q1) out of Germany with a print of 0.3% expected. The (YoY) ((Q1) figure is expected to come in at 0.7%.
You can view the recent movements on Sterling/Euro in the graph below –
If you are purchasing EUR from GBP I would look at implementing a market order at 1.16 the figure. Please contact the trading department to place an order. Whilst I don’t expect Sterling to rally massively this week there may well be a small move to the upside that takes us back to that level.
Please get in touch with me directly to discuss your upcoming requirements. Please do consider Forward Contracts to protect yourself against any adverse moves.
Have a fantastic week.
Written by Liam Alexander