Raphael Sonabend, FX Analyst
Last week’s Sterling close has seen the majority of analysts in agreement that for now, the pound is safe. After a rocky start to the year, where the pound fell against the majority of counterparts, Sterling has recovered much of its lost ground and is now trading at record highs. Trading in favour of the pound continued last week as global tensions rose regarding Greece’s debt crisis and faith in the dollar fell slightly as consumer sentiment fell on Friday afternoon. This morning has seen the Confederation of British Industry raise their UK growth forecasts from 2.5% to 2.7%, supporting the Bank of England’s positive revisions last week to their 2016/17 growth forecasts. A quiet day in the data calendar will leave focus on Greece today as a second day of Eurogroup meetings will inject further volatility in the markets.
GBP/EUR: Currently trading at 1.3495
- Sterling gains continued on Friday as limited data came out of either country. Reaching 1.3533, this pair is still struggling to hold gains above 1.35. This morning saw an encouraging report break as the CBI raised growth forecasts from 2.5% to 2.7% on the back of low oil prices. Furthermore, as house prices have shown constant signs of growth, economists are now considering if we can call an end to the housing slowdown.
- Despite positive UK revisions this morning, in anticipation of the Eurogroup meetings today, the euro strengthened as a result of optimistic reports.
GBP/USD: Currently trading at 1.5410
- Slow gains throughout Friday’s session saw the pound break 1.54 as the US preliminary consumer sentiment survey fell from 98.1 to 93.6. This in itself does not represent a downward trend as it had previously been at an 11-year high. This fall may be due to oil prices starting to rise once more and traders assuming that we have seen the low.
- US banks will be closed today in observance of President’s Day and this pair will therefore trade with focus on the UK. As no UK data is due out today, trading will centre on the positive release from the CBI this morning. With figures being revised up across the board, this pair hit 1.544 this morning and could continue to gain throughout the day.
EUR/USD: Currently trading at 1.1417
- The euro closed on a positive note last week, following a string of poor data out of the US that saw the pairing climb above the 1.14 mark. With a bank holiday in the US today, market activity is set to be influenced by events coming out of the Eurozone.
- Today’s Eurogroup meetings are likely to create some market volatility, as speculation continues regarding Greece’s involvement in the Eurozone.
GBP/AUD: Currently trading at 1.9800
- This pair saw relatively range-bound movement on Friday as a combination of poor US data and increasing global risk appetite, saw this pair bounce between a cent range. New motor vehicle sales m/m data this morning saw a fall rise from 2.6% to -1.5% but the Aussie’s losses were limited.
- Trading today is likely to see pressure lifted off as focus will be on the Eurogroup meetings throughout the day. Aussie strength could be seen if an agreement is reached and global risk appetite increases further.
GBP/NZD: Currently trading at 2.0471
- The Kiwi gained on the pound throughout Friday’s session, despite US data weakening the US dollar. Opening the session around 2.07, this pair has since managed to fall to 2.0478. Kiwi gains may have been on the back of rising global risk appetite, which is likely to have increased after global tension fell slightly as a Ukraine ceasefire was agreed upon.
- Kiwi gains could continue today as focus turns to the Eurozone; commodity currency pairings will likely take a step back as the GBP/EUR/USD triumvirate fights for strength.
GBP/CAD: Currently trading at 1.9172
- Canada’s manufacturing sales data impressed on Friday, rising to 1.7% in December, despite a 9.3% drop in sales of petroleum and coal. This provided the Loonie with a boost before the week came to a close.
- A lack of data out for this pairing coupled with US Presidents Day bodes for a quiet session with little to swing momentum. We expect this rate to move within a tight range today, with Loonie strength possible if oil continues to gain.
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