In a furtherance of what we witnessed this week, sterling continued to gain strength against all of its major crosses yesterday, striving to repeat its recent form, in a bid to hit the 8 year highs it reached at the back end of March of 1.4250 against the EUR, and regaining the ground it had recently lost against the USD, hitting a daily high of 1.5689.
This GBP strength has come about as a reaction to some strong data releases in the form of a myriad of retail sales. The most notable of which was UK Month on Month sales coming in at a 1.2% increase, higher than forecasts suggested, and an almost 2% turnaround from last month’s negative figure.
Coupled with slightly disappointing PMI data from the Eurozone which still demonstrated expansion, however at a slower rate then expected, it is of no surprise that this climb has occurred.
No report in these times is complete without a paragraph on the situation in Greece; however. As we slowly build towards another crux, rumours started by one their finance ministers today are now circulating that Greece is likely to default on their next payment to the IMF on the 5th June.
The markets reacted accordingly as expected, but it somewhat feels like we’ve heard this before, and the markets will be sure to reverse their trend should the outcome differ.
This being said, the question posed is would a Grexit even be seen as a negative for the single currency, or would investors view it as a shedding of dead weight? This question is likely to only become answered should the situation occur, so consider yourselves warned.
GBP/USD had a relatively stable day yesterday, with trading levels varying from around 1.55 to 1.56, even negative releases from the US failed to have any considerable impact.
If you are in a situation where you have an upcoming EUR or USD requirement, it may be prudent for you to get in contact with one of our knowledgeable brokers, for a free and no obligation consultation, to explore the possibilities of securing a rate for the future on one of our forward contracts.
This contract is designed to protect you against any adverse movements in the market, and give you piece of mind by knowing what any future international purchases will cost you in Sterling.
Today is a very busy day on the data front, with the potential for market movement high throughout the day, as notable releases are dispersed at intervals until early afternoon.
German GDP figures are the first point of interest as the Eurozone’s largest economy has the power to influence investors’ views of the strength of the single currency, with any deviation from the 0.3% expectation likely to cause movement.
Three speeches of note take place today, a brace by ECB president Draghi will together give further insight into the central banks view on the state of the Eurozone economy, and could once again effect. Later in the day we will then hear from Governor Carney in relation to the state of play here at home.
From across the pond GBP/USD movement may be witnessed as a result of CPI data which is expected to come slightly negative at -0.1% again, any deviation from this figure may result in a movement in the rate.
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