Sterling continued to trade on positive sentiment
27 March, 2018
With a lack of any data from the UK, sterling continued to trade on the more positive sentiment it found over the past week.
With a raft of positive releases giving the pound a much needed boost last week and the fact two of the Bank of England members voted for a rate hike, despite inflation falling more than expected. The hint of a possible interest rate hike in May is giving investors fresh encouragement to bet on sterling which has led to some of the best trading rates in months against currencies like the euro and US dollar. This continued on Monday as we saw sterling gain a cent over the US dollar and take two cents from the Canadian dollar over the days trade.
It was a bit more mixed against the single currency euro, which started trading in a small range before heading lower when the US markets opened after lunch. The euro gained nearly 3/4 cent against the pound and half a cent against the US dollar, pushing the pair to fresh highs of 1.245, with some analysts eyeing the next resistance level of 1.255 in the coming weeks. This is all sentiment led as a weaker dollar gives way to a stronger euro on the currency see saw which as we have seen in the past and yesterday, can also affect the pound, which lost ground to the euro and made ground against the dollar. The pound did manage to claw something back as the trading day closed but still ended lower than it started against the euro.
Today has plenty of data released but nothing really of note to really affect the markets. The main release this morning is an EU business climate report plus consumer confidence reading. After lunch there is some US homes sale data and a speech by Fed member Bostic.
With little to go on and such gains made last week, at some point we could start to see some profit taking as the month comes to a close this week. As such, with the use of a forward contract you can lock in your rate for your future currency requirement, with just 10 percent of the sterling equivalent today and take the risk away that the rates may fall away. To find out more, speak to one of the CI team today.
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