World First Foreign Exchange 28 September 2009 Update: The Trend Continues for GBP
The fallout from Mervyn King’s comments continued apace on Friday dragging sterling to new lows against its major trading partners.
With a central bank increasingly happy with a weak sterling, currency traders around the world bet heavily on further falls for the pound. As we had warned of numerous times in the past week GBP fell into the 1.08s against the euro and below the 1.60 handle versus the US dollar.
Sterling will continue to be bet lower we believe for a good couple of weeks if not months; we believe that a GBPEUR rate of 1.05 and a cable level of 1.55 are not unrealistic and indeed probable.
Data to support sterling is, while forthcoming, not likely to stem the bloodletting. Today we are looking at a quiet day of data but with equity markets down we expect risky assets to continue to shed weight this session. The euro should gain however as the news that Merkel and her CDU party have been returned to power in Germany will provide some continuity in dealing with this crisis.
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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.
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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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