Sterling Euro hits 22 month high once again!
Following better than expected mortgage approval data and not too terrible PMI (Purchasing Managers Index) data we have seen Sterling have yet another gravity defying start in early morning trading.
The Pound is up against pretty much all majors, not by a huge amount but it is still up. Personally I feel that the sudden confidence in Sterling is due to it now being the best of a bad bunch…. Surely any investor with their head screwed on would be wary of the Euro at present and with the potential of QE3 hanging over the head of the Dollar the Pound surely steps forward… Even if we are technically in a recession at present.
The question really is how long will this last??? We have seen Sterling have a few decent spurts like this over the past few years, yet only ended up disappointed with it fizzling out thanks to poor negative movements from the Bank of England who seemingly get twitchy when the Pound gets too strong.
The sensible option in this market is to use a Stop Loss order… This is where you set yourself a worst case scenario in the market e.g 1.22 – If rates should start to drop[ away and that level become your trading level even for a second then your currency is automatically purchased for you, however the order (as long as it is not filled) can be moved at any time so if rates are creeping up you can always ‘chase the market’ up and keep increasing your bottom figure.
The good thing with this is that you know what your worst case scenario is for example the minimum your Euro purchase will cost, the bad part is if the market should jump down to the point your currency is bought and then fly back up again then you have secured your currency and the deal is done. For the less riskier client though this is ideal as you do get to see how the market pans out without losing too much if the market should drop away.
If you want more information on this then feel free to contact me directly email@example.com