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Battles on the currency market are sometimes typified as heavyweight boxing matches between two powerful and determined opponents knocking seven shades of stuffing out of each other. The battle however between GBP and EUR has turned into somewhat of a drunken brawl with both combatants swinging wildly in a desperate attempt to score points; no knockout blows are forthcoming. As we said yesterday GBP has had a good run of late and moved through the important resistance level to consolidate in the 1.11s. It was dragged back into the scrap yesterday by bullish German trade data and a weak FTSE and now sits balanced on a knife edge.

Sterling was also mixed against the dollar yesterday as volatile stock market moves saw risk appetite/aversion whipsaw violently over the course of the trading session. The major event risk today will naturally the Bank of England’s MPC meeting for which the main focus must be drawn away from the interest rate decision and instead onto quantative easing. It would be madness to do anything with the interest rate at current levels and the MPC have frequently warned themselves of surprises to the market and the subsequent effect it may have on GBP; in other words we predict a hold on interest rates and no further review of the £75bn set aside for asset purchases.

Risk to sterling’s strength against the USD is also apparent in this afternoon’s US trade balance announcement. Should the measure of imports vs exports be better than expected the greenback could stage a fight back of its own into the Easter weekend.

From everybody at World First, we wish you a Happy Easter.

Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our: Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080. Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.

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