Calm markets ahead of key events

25 April, 2018

Rob Bastin

Tuesday was another quiet day on the markets as traders reflect on recent events and await some key releases in the coming days. With an absence of any high impact data, the Pound, Euro and US Dollar all traded in a tight 0.3% range against each other but this calmness in exchange rates is unlikely to last long. We can expect another similar day today for the majors which can provide a final chance to take advantage of the current exchange rates before the risk levels and volatility picks up again in the coming days.

Tomorrow we have a vote in the House of Commons on whether or not the UK should be in a Customs Union post-Brexit, which follows the government’s defeat on this matter in the House of Lords last week. While this motion is non-binding it could pile extra pressure on the Government in the current trade negotiations, which in turn could again weigh on Sterling itself. Tomorrow is also the next interest rate decision from the ECB, so Euro buyers or sellers will want to take note. Whilst the base rate itself is not expected to change, the ECB has begun a more hawkish path on interest rates and tapering of QE that has consistently strengthened the Euro in recent meetings. Once again the markets will be listening carefully to Mario Draghi’s comments in the press conference, for any further guidance on the recovering Euro-zone and potential changes to monetary policy.

On Friday morning at 9:30 am we will have the last key release for the UK for April, in form of the first Q1 reading for GDP growth. This release poses very real risks of a reduced growth figure for the UK, currently at 1.4% on the year. With all the bad weather in February and March, this has had a heavy impact on productivity in many sectors, and the recent poor run of Retail Sales figures and construction PMI is a good indication of this. A lower growth figure would not only be bad for the pound but could also have knock-on implications to the Bank of England’s plans on rate hikes this year.

If you cannot afford to gamble with rates dropping any lower than they have in the last week, contact your broker today to discuss how can remove the risk with a Forward Contract, or manage the risk with a Stop Loss or Limit Order.