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Crunch time for the UK, will recession be avoided? Exchange rate forecasts (Mike Vaughan)
As my colleagues post highlights opinion in the office is entirely divided. The majority of traders believe a 0.1% figure will be released and this in turn should lend support to sterling exchange rates as a result. I for one have predicted this and hope for a better day pushing GBP/EUR above 1.18, GBP/USD towards 1.54 and GBP/AUD pushing closer to 1.50 – a trigger point for many AUD buyers.
Of course the decision will be a close one and many of those with an interest in the money markets will be keeping a very close eye on the 09:30 release. The office has a range of predictions from 0.1% to – 0.2%. To avoid recession we need to see 0% or better, something that may give the economy a much needed boost. Of late data in the UK has been somewhat better with the only exception retail sales, but these have been affected by unseasonably poor weather, something you cannot legislate for. Today could prove incredibly volatile, should you wish to remove this uncertainty then get in touch early on 01494 787478 or email [email protected]
Although UK GDP data is likely to dominate today’s trading, other data to watch out for will include the following:
US Jobless Claims at 13:30 – expecting to show a slight decrease possibly lending support to the US dollar this afternoon.
Overnight we have the interest rate decision from Japan – expected to stay on hold at 0.1% and should cause little movement for GBP/JPY but watch out for the Bank of Japans monetary statement that will follow. This will outline the policies the BofJ will have in store and could have an impact on riskier currencies such as the AUD, NZD and ZAR as the JPY is often used in conjunction with these currencies through he use of a carry trade. This is when investors borrow in a low yielding currency i.e. JPY and look for higher grossing currencies such as AUD, NZD and ZAR. It is a risky trade as the exchange rate movement can remove any gains from the higher yield offered and as a result economic sentiment from Japan could adversely affect the riskier currencies. I for one feel further opportunities will be seen for buyers of the AUD, NZD and ZAR in the coming few days and weeks.
To finish off the week watch out for annualised US GDP at 13:30 tomorrow. Expected to show a strong improvement which should drive cable rates back towards 1.51/52 to finish off the working week.
Should you have an upcoming trade to arrange and you would like to discuss the market in more detail and how we can help you achieve a competitive commercial rate of exchange then please get in touch. We are here to help. Please email with your particular currency requirement and I will happily get in contact to discuss your options to help you maximise your trade. Email [email protected]
2013-04-25 05:04:27
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