It’s a quiet day ahead for data in foreign exchange markets in the UK and Europe today, with the notable key release for the dollar coming at 13:30, where critical jobs figures will be released. The strong rebound in figures stunned traders last month; another punchy number could provide the US economy with the desperately needed ammunition it needs to push against the huge new Coronavirus case numbers flooding in on a daily basis. Back on this side of the Atlantic though, sterling, in particular, has been steadily trading within a downward trend against the euro since April the 30th, with news only exacerbating the issue.
In foreign exchange markets, when there is a lack of significant data or there are too few notable political events to produce volatility, most currencies tend to follow trends and bounce between the key buy and sell areas – as highlighted by Jack yesterday. Essentially, without getting too technical, keeping an eye on the overall trend of a currency and the aforementioned key price levels is a fantastic way of keeping an eye on the bigger picture in the mid to long term, instead of staring at rates day in day out.
As far as it goes for sterling; putting aside the recent Brexit trade talk woes, sluggish recovery, uninspiring infrastructure project announcements and general lockdown malaise – as mentioned before, the technical picture has long been falling in a downwards trend again the euro, even if the day to day fluctuations seem to suggest recovery. In essence, the wider technical picture can assist with trying to work out where sterling is going – a question I am asked on a daily basis as a relationship manager here at WorldFirst. Whilst it is still vital to keep abreast of the key fundamental drivers that contribute to sentiment in the markets, by discussing key levels and trends with your relationship manager, a far better picture can be made by highlighting when tests of these areas are coming – where the sterling markets then decide on changing the trend or obeying it.
Admittedly, aspects of charts and analysis can seem daunting; however, if correctly utilised, they can become a key part of your longer-term currency strategy. Jack Nicholls, Alistair Hutson and I usually post our insights into the market movements on LinkedIn, as part of our blog posts or upon request. Feel free to connect with, or follow us for more information.
Have a great day,
Author: Joshua Haden-Jones, Senior Relationship Manager
Whilst every effort is made to ensure the information published here is accurate, you should confirm the latest exchange rates with WorldFirst prior to making a decision. The information published is general in nature only and does not consider your personal objectives, financial situation or particular needs. Full disclaimer available here.