ACM Update 27-06-22

Wimbledon gets underway today. The Strawberries and cream will be more expensive this year that’s for sure. Will Sterling come under a volley of hits this week or will GBP return a blinding forehand to the Dollar?

There’s a cacophony of noise around Sterling at present and downside risks remain. The word ‘recession’ is being mentioned more and more around UK PLC. Political and economic disharmony abounds.

You can view the recent movements in Cable (Sterling/Dollar) in the graph below –

Sterling is trading slightly higher in Monday’s session although upside remains capped. If you have a requirement to move from GBP into USD consider speaking with our dealing team to offset any further downside risk. Could we move below 1.20 the figure? Quite possibly in current market conditions. Our team will work with you to discuss a strategy that is tailored specifically to your needs. If you would like to reach out to me directly to set up a call please feel free.

If you hold USD consider executing a percentage of your exposure on a SPOT basis and implement take profit orders to take advantage of any further moves in your favour over the coming week. If you would like to discuss technical levels please reach out to your dealer and they will take you through levels to aim for.

This week is relatively light from a data perspective. However, on Wednesday we have GDP annualized (Q1) from the US with expectations of a print of -1.5%. We have speeches from the US/UK/EU from the Fed Chairperson Powell, Bank of England Governor Bailey, and the ECB’s Lagarde. From a UK perspective on Thursday, we have GDP (QoQ) (Q1) released with a print of 0.8% expected.

On the Sterling/Euro front we are trading under 1.16 the figure. You can view the recent movements in the graph below –

The EU is still contending and concerned with inflation. Will the ECB get cracking with their own rate hiking cycle? Interest rates are still at record lows of -0.5% and a potential increase in CPI could prompt calls for a 50bps hike at the next ECB meeting in July. However, the market is pricing in a 25bps and from previous form I would expect a 25bps hike to occur.

If you hold EUR consider taking advantage of the moves lower in GBP/EUR. If you would like a rate of exchange please reach out to the dealing team and they will be happy to assist. Have you implemented Forward Contracts for Q3? If you haven’t and would like a conversation around a more effective hedging strategy the Aston team is on hand to assist you mitigate some of your downside risk whilst allowing room for some upside.

If you have any questions or would like a demonstration of our Origin platform to help you with your payments and FX please reach out to me directly.

Have a fantastic week.