Morning all
Hope you’ve had a good start to the year 😊
Straight into it today…
EUR
Will start with EUR as that appears to have taken up a fair amount of rhetoric at the moment. When we sneeze, the Europeans catch a cold and they are now suffering with the same inflationary pressures as us with talks surrounding increasing interest rates to combat the spike. The only concern with this is that they do not have a comparable infrastructure as us to manage a significant daily cost of living and the fall out of this will mean large EUR weakness. Thus if you have any EUR to sell, do so now. If you’re a buyer hold fire, we have the Bank of England talking next week and we are due something mildly positive from Andrew Bailey.
GBP
Continuing on from the above we are looking at a 0.5% interest rate hike early February and hopefully we’ll see a rally off the back of this. Particularly for you USD buyers, it has been mind numbingly range bound!
Barclays’ economists say the UK economy is proving more resilient than many had expected with incoming data pointing to “a fairly mildly decelerating economy despite a good number of recent negative shocks”. Barclays cites another potential source of support for Sterling in the developments around the Northern Ireland protocol with the UK signalling a strong desire to get a deal through.
USD
Don’t expect any major moves until Chinese New Year has finished and production has started again since their most recent large Covid shock.
Here as always if you need anything.
Best
1FX