A Not So Sterling Day For Sterling

24 June, 2015

Simon Eastman

Yesterday we saw the pound fair poorly against the majority of its counterparties, not helped by the total lack of any UK ecostats for investors to work with.

All eyes are as always recently looking towards the Eurogroup meetings to see if and when they can agree a deal with Greece, in order to provide the bailout funds required so Greece can meet their current debt repayments and look to secure longer term security and their place within the single currency bloc. News wires were reporting yesterday that members were “optimistic” about a resolution within the next few days although nothing came to light yesterday.

In fact, despite this optimism and the fact all the data out yesterday morning was from the EU, the euro saw some hostile trading. German manufacturing and services PMI, coupled with the EU PMI figures all came in above expectations – some significantly, along with a very positive Italian retail sales figure. But these seemed irrelevant to investors as we saw the euro lose value to both the pound and US dollar throughout the day. Sterling took nearly two cents off the single currency at the peak of the day giving those looking to send money to Europe some of the best levels of exchange in a few weeks. Currency Index saw significant buying activity at the psychologically favoured 1.4 level and above, as limit orders filled and those looking to secure funds for a future transaction took advantage by booking forward contracts.

The rally peaked and the rates tapered back, ending the day half a cent off the high, while the raft of US data released in the afternoon had little effect on the markets. The key durable goods orders missed expectations as did the new homes index, but despite what should be currency negative, the US dollar continued with its gains against sterling. The fact we saw a small gain back as trade closed was mainly due to the euro which had peaked and tracked back, again a shining example of the recent currency seesaw we have seen in trading patterns of late – a weak euro brings a strong dollar and vice versa.

So on to Wednesday and another day of little data. The UK just sees BBA mortgage approvals while German IFO business sentiment figures also released this morning will likely be overshadowed by the next Eurogroup meeting. This afternoon we could see market volatility as US GDP and personal expenditure figures are released at lunchtime. The rest of the day will no doubt be another led by sentiment, seesaw trading and further waiting for any news out of Brussels!

To ensure you dont get caught out or miss out on any opportune trading levels, make sure to stay in touch with the team here for some friendly guidance on your upcoming exchange.