Thursday, 17 August 2017
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Weekly Financial Update

Uncertainty in the economic and political world is creating a great deal of volatility in the Foreign Exchange Markets. The US and North Korea situation is at the forefront of this, and when instances like this occur the US Dollar becomes a bit of a safe haven currency. The US Dollar again extended its gains, more against the Pound rather than the Euro.

The Pound has had an up and down week. At times we looked like we were going to break back up, but resistance always seemed to kick in, and we finished the week heading towards the pivotal 1.10 mark. There are a few UK economic figures out this week, including the inflation number. If this is higher than expected then the Pound could get a minor boost. If it’s lower, then expect Sterling to continue its slide.

From where the Pound sits now it seems to be a real struggle to move higher. It really does need something positive to restore it to its upward momentum. Sure thing is any bounce in the Pound will more than likely be very short lived. On the horizon, and once summer is over, the market will be looking to further BREXIT talks. There is still a lot of unease as to how the UK leaves Europe and what the cost will be.

The short term target for the Pound now on the downside is 1.0850. This could be particularly feasible given that the move down has been quite rapid. Some commentators are even talking parity. At this moment this is not in our thoughts, but the signs of a major recovery still seem a long way off. As we always say of late, any bounce higher is a good place to buy currency. It's hard to say what levels we will see on the topside if we rise up, but the heady levels of 1.15 of a few months ago seem quite a way off.

The key this week will be the economic figures and this could set the short term direction of Sterling.

Have a good week.

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The Premier FX Team

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