Prior to last Thursday’s slight correction the general movements for the pound over the last month have been very positive. We have hit a near 2 ½ year high against the greenback having shifted 3.3% since mid-November. A similar trend has been seen against a number of currencies, most notably just shy of 7% against the AUD (a near four year high), 8% against the ZAR (five year high) and in excess of 4% against the CAD (four year high) all since the start of November. This has created some unexpected opportunities and shows how important keeping in touch with your account manager can be.
Sterling had rallied up past 1.21 mid last week but following the ECB interest rate decision to keep rates on hold and the subsequent post decision press conference, the Euro rallied back towards 1.19 – showing how quickly levels can move. For me I believe this trend could be a real opportunity for Euro sellers as I personally believe longer term with the positive sentiment coming from the UK that we are likely to see a sustained period of GBP/EUR sitting above 1.20.
Looking at data this week today’s UK industrial production and manufacturing figures at 09:30 on along with NIESR UK GDP estimates at 15:00 will be a key area to focus on should you have an interest in the pound. Heading towards the latter stages of the week and we have the ECB monthly report at 09:00 Thursday and to finish off the week employment data from the euro zone on Friday.
Strong rates on cable
As mentioned the pound is currently sitting just shy of a 2 ½ year high against the greenback. Following Fridays non-farm payroll figures (slightly better than forecast) the pound has remained range bound between 1.63-1.64 – some attractive buy levels in my view.
This week again UK industrial and manufacturing and GDP data today will be key for anyone looking at cable, something which could push levels back towards the 1.64 mark. Other important data will include the US budget statement at 19:00, with Thursday looking the busiest day for the dollar with initial jobless claims and monthly retail sales figures due for release at 13:30
A good time to buy AUD and CAD?
Sterling’s recent run against the AUD and CAD has been considerable. Since August the pound has rallied over 10% against the Canadian dollar, a huge shift considering that GBP/CAD rates are usually relatively stable. In fact during a three year period (Aug 2010 to Aug 2103) the high low range was only 6% and with levels at a four year high, for me it is a very good time to buy CAD.
Looking at the AUD, rates have dramatically improved since the lows of 1.445 in April pushing through 1.81 last week. This is over a 20% increase and a near four year high, again an opportunity for AUD buyers. This week is a relatively quiet week with the major data set in Australia being unemployment figures on Thursday – expected to increase from 5.7% to 5.8% and could lead to further losses for the dollar.
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