ACM Update 24-01-22

GBP/USD has opened in the mid-1.35s this week. Will a strengthening Dollar push Cable (GBP/USD) to the downside or will the Pound post some upside momentum this week?

I expect Sterling to come under some pressure this week with UK political instability coupled with the first Federal Reserve meeting of the year. Indeed, Sterling has edged lower this morning after the release of preliminary manufacturing and services PMI (Jan) with prints of 56.9 and 53.3 respectively. These numbers came in under expectations. Sterling is now trading around 1.35 the figure on Sterling/Dollar and has given up some gains on Sterling/Euro.

If you have a requirement to sell Dollars, consider implementing some take profit orders to the downside to take advantage of any further GBP weakness. You can view last weeks movements in the graph below –

If you would like to discuss technical levels, please reach out to me directly or contact our trading department and they will be able to assist you.

We have the FOMC (Federal Open Market Committee) press conference this week that will determine next steps on US monetary policy. Rising inflation and some commentary around interest rate hikes will be keenly watched. We will have some volatility around this event so please make sure you have a plan in place around any Dollar exposure you have. If you would like to chat through any hedging requirements now January is fully under way and feet are under the desk, feel free to let me know.

In terms of Sterling/Euro I expect the Euro to come under some pressure with heightened tensions between Ukraine and Russia. Indeed, the PMI (Purchasing Managers Index) release showed a drop from 53.3 in December to 52.4 in January with the omicron variant denting activity.

Sterling/Euro broke through the 1.20 figure although has failed to have a sustained break above this.

You can view last weeks movements in the graph below –

If you hold GBP and need to move into EUR then consider locking in some on a SPOT basis. Compared with January last year we are around 8% higher. If you would like a rate of exchange or to chat through your specific requirements feel free to reach out to our trading department.

If you are holding EUR and need to move into GBP consider implementing staggered take profit orders to the downside as a week is a long time in politics they say.

If you would like to have a detailed conversation around your corporate flows for 2022 feel free to message me directly and we can set up a call to chat through a plan to mitigate your FX risk.

Have a fantastic week