GBP/EUR keeps flirting with the 1.20 level

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GBP/EUR keeps flirting with the 1.20 level however it is struggling to hold above there. We have mortgage approvals out this morning alongside consumer credit and PMI construction data out of the UK that may give us an idea of the short term direction for Sterling over the coming days. A New Year and yet Greece are still in the headlines. Will they leave the Eurozone or won’t they? There has been a lack of support for the harsh austerity measures imposed (shock!) and now Greece is beginning to issue ‘warnings’ that they may leave the Eurozone. Troika inspectors are due in Athens Mid January to discuss and establish the next 130 Billion EUR tranche of funds. However, before they can even look to discuss that, measures promised including public spending cuts and the privatisation program still need to be implemented.

EUR/USD hit the 1.3080 zone yesterday with positive data in Europe and the US driving demand for the single currency. This has somewhat curtailed overnight and I’d expect on this pair back to somewhere near the 1.30 figure in intraday trading today. We had German CPI out this morning that came in under expectations. The market had expected a rise to 52.7 however the figure posted was 52.4. We saw EUR/USD tumble down to the 1.3035 mark after the release of the data. I don’t see EUR/USD climbing much higher as simply put there is no reason for it to. I’d suggest over this month we’ll see EUR/USD down to the 1.27 level with problems with Greece again resurfacing and the markets attention refocusing on them.

GBP/USD seems to be rallying after the end of year sell off. Indeed, the cross is posting gains for the fourth consecutive session and is firmly back into the 1.56’s with a strong risk appetite being the main momentum driver. I’d suggest we’ll see GBP/USD continue its climb higher over the course of this month back to somewhere near the 1.59/1.60 level however it won’t go in one direction. We’ll see some retracements lower on this pair however I think we’ll push higher. If you’re a buyer of USD then compared with where we’ve been over the past two/three weeks then it may be worth covering off some of your exposure at these levels. We were in the 1.54’s end of Dec so we’re at much better level’s now.

We have CPI out of the EMU that is the main figure of note for today. The consensus is for a figure of 2.8% against a previous of 3.0%. Very little data of note from across the pond this afternoon with Factory Orders (MoM) (Nov) being the only figure that may have an impact on USD crosses.

With a New Year upon us and currency fluctuations set to continue it may be worth having a conversation with us to discuss your currency hedging strategy for the forthcoming year. There may be certain areas that we can improve upon and help you manage your Foreign Exchange transactions better and thus save you further money. Please contact to discuss.

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GBP/EUR keeps flirting with the 1.20 level

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