Sterling correction provides opportunity

27 January, 2016

Rob Bastin

Tuesday was another quiet day for economic releases, leaving it to the technical’s to drive exchange rate movements. With an absence of UK data the pound was able to continue positively in its correction phase after such a terrible start to the year. GBP/EUR and GBP/USD are now trading around 3 cents higher than they were last week after suffering a 6-7 cent loses since the turn of the year. Crucially the landscape and forecasts for Sterling have not changed, and technically the trends remain very much against the pound with the recent lows extremely likely to be tested again in the coming days or weeks. This natural correction means that current exchange rates should therefore be viewed as a great opportunity to secure your currency at better levels, all be it not as good as rates seen in previous months. For those of you who do not need the currency just yet but wish to take advantage if this spike then you can do so with just 10% deposit for anything up to 1 year in advance.

The afternoon did bring a couple of figures for the US although these smaller releases did not impact the exchange rates. Services PMI fell just shy of the 54 forecast with a result of 53.7, but Consumer Confidence was better than expected, up to 98.1 from 96.5 previously.

Today the focus is again on the US with New Home Sales figures at 3:00pm, and more importantly an interest rate decision at 7:00pm this evening. Having raised interest rates last month no action is expected to be taken, however the market will be eagerly awaiting the Monetary Policy Statement for any indications on when the next hike could take place, currently expected as early as March. Later tonight we also have an interest rate decision in New Zealand at 8:00pm.