Weekly Financial Update
- Created on Monday, 20 May 2013 08:00
STG/EUR is really acting as a cross currency at the moment. STG/USD has moved down through 1.52 and EUR/USD has also moved lower with it. This has left the "cross" pretty stable in a tight range around 1.18. To be honest we can't see this changing for the coming week. There may be a little bias to the downside but only as far as 1.1650.
There seems to be no momentum at the moment. Markets are busy, but they are concentrating more on the components such as STG/USD and particularly EUR/USD. Once EUR/USD pushed through 1.30 then it was inevitable we would see 1.28. But STG could not hold up against the USD - stopping STG/EUR going higher.
The Bank of England release their minutes this week, which could well give an indication of the next move for the Pound. There is still a possibility that further quantitative easing will be added to the system. This is weak for Sterling as the markets can see this as a negative sign for the economy.
Inflation could also rise and any weakness that comes through for the economy will also not bode well. However, on the flip side any positive news may give it just that little lift it needs to get to 1.19. We still think 1.20 will be a tall order short term. However, as we say, these are not bad levels.
1.17/1.18 is not bad at all given the past year or so. We are roughly mid range from rates in the past year. As the year goes on who knows? We may well see 1.20, but we could also see 1.14. that's the kind of market I'm afraid, event driven and reactive.
Key factors:
* Anticipated range this week STG/EUR 1.1575-1.1975
* Inflation set to rise
* UK Inflation set to rise
* STG/USD through 1.52
Have a good week,
The Premier FX Team
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