ACM Update 15-06-22

Written by: Liam Alexander
Date posted: 15-06-22
Federal Reserve

Sterling/dollar traded under 1.20 the figure yesterday, hitting March 2020 lows. Are we due a more substantial move lower? Is 1.15 a possibility? Sterling/Dollar has regained some ground today with a dollar sell off with market participants awaiting the Federal Reserve and Bank of England events.

Is everything priced in for Sterling? I think risks remain and there is potential for a further downside move. Sterling has been weathering the storm. Ultimately, the volume of factors UK PLC and GBP are contending with is becoming difficult to ignore. We had a mixed labour report yesterday and then we had the SNP say they were preparing for a new independence referendum. Helpful.

You can view the recent GBP/USD movements in the graph below –


If you hold USD and need to move into GBP consider implementing market orders at 1.20 the figure today. Please reach out to your point of contact at Aston and they’ll assist you. There isn’t much data out today so any Sterling/Dollar moves will largely be dictated by the Dollar. The Federal Reserve meeting will be the most keenly watched in about a decade. Will they hike by 50bps? 75bps? How will inflation commentary from the Fed Chairperson, Powell, affect markets? There is a myriad of factors that can change the pricing in GBP/USD over the next couple of days. Please make sure you’ve had a conversation today with the Aston team ahead of these events.

In terms of Sterling/Euro we are trading at the lows of April 2021.

You can view the recent movements in the graph below –


If you have a requirement to move EUR into GBP consider taking some risk off the table and locking in some GBP on a SPOT or Forward basis. Could we push lower? Quite possibly. Could the ECB (European Central Bank) hike rates more aggressively in July compared with the expected 25bps? This will be impacted by news of an emergency ECB meeting today to tackle the widening spread in bond yields between Germany and Italy and borrowing costs across Europe. EUR is up on news of the meeting. Are we seeing the beginning of a stronger Euro? Highly debatable although short-term I think it will continue to trade well against GBP.

After the ECB meeting today, the Fed meeting this evening and the BoE meeting tomorrow the FX landscape, once again, could have completely shifted. If you would like a member of the Aston team to reach out to you directly to discuss your specific requirements ahead of these events please let me know.

Enjoy the sun!