Good morning,

Today will see the release of a slew of economic and central bank releases globally; starting with the UK at 09:30, Europe at 10:00 and then finishing with the USA at 19:00.

The pound has gone from strength to strength since the prorogation of Parliament, legal or not, as we could well find out from the Supreme Court in due course; showing that there is room to manoeuvre with sterling so long as politicians keep their mouths firmly closed. GBPEUR has flirted with 1.1300 and 1.2500 on GBPUSD – only to sell off when these levels are hit.

In the absence of political chatter, the sterling markets will now focus back onto data reports to lead trading. This morning at 09:30, we have retail sales figures due out which is bound to course short term volatility in the market. While a modest fall is expected on the yearly figure, wild deviations from this, especially when considering the health of the High Street (John Lewis losses and Debenhams administration), could knock the wind firmly out of the pound’s recovery.

Following at 10:00, European Inflation data will release. A modest hold across the board or even a small rise could see gains for the single currency against the pound in particular. After the ECB’s introduction of further stimulus last week, GBPEUR traders will be looking to capitalise on the double whammy of UK and euro data this morning in the absence of further chatter from the ECB on what future fiscal policy will look like.

Finally, at 19:00 this evening, the Federal Bank in the USA will announce its interest rate decision – a cut of 0.25bps being fully priced in and expected at this point – from 2.25% to 2.00%. Any deviation from this would, of course, cause tremendous volatility on the dollar; however, as that is an extremely unusual phenomenon, the key event to observe would be the press conference afterwards. During this segment, unscripted questions are posed to the chair and any giveaways on further hikes or cuts will dictate dollar trading through the Asian session after the UK has closed.

In the near term, anything above 1.1200 on GBPEUR is extremely good value, especially with so many unknowns still surrounding Brexit. Upwards of 1.2400 on the dollar is also a level worth removing risk at.

Make no doubt about it; today should be a very bouncy day depending on the data mentioned above. As waiting and hoping isn’t a strategy anyone should employ; it is critical to reach out to discuss your exposure with our market experts.

Have a great day.

Author: Joshua Haden-Jones, Senior Private Relationship Manager