20th April 2017 Market Update
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?? GBP – The pound has maintained its momentum following Theresa May’s surprise election announcement. There are clear signs, however, that having broken through previous resistance levels, Sterling has stalled at the next hurdle. It is likely now that the currency will hang around its current position while investors wait until June. It remains a fantastic position to be selling the pound versus its peers compared to recent months and it remains to be seen how the currency fares following the election.
Today sees a speech by Mark Carney and it will be very interesting to see what he makes of recent events.
?? EUR – There has been little of note with the single currency recently. Largely shifted by external factors, the euro has managed to make small gains against a vulnerable US dollar, driven in part by impressive core inflation data and trade balance figures.
There is no major data out today, though markets will keep one eye on German producer price inflation data.
?? USD – There is no question that the dollar has suffered in recent days and is looking somewhat vulnerable going forward. There is increasing speculation that perhaps investors will not be seeing the expected key interest rate increases for the remainder of the year, especially with President Trump stating unequivocally that he feels that the greenback is too strong.
The dollar appears to be the biggest loser with recent geo-political events, but it must be remembered that it remains the world’s ‘go to’ currency and enjoys the strongest reputation. It could bounce back at any time.
17.30PM – Governor Mark Carney speaks.
Our View: It is clear that Sterling has enjoyed a significant bounce following the election announcement. This is likely due to investors eyeing the polls and concluding that the Conservatives will end up with a greatly increased majority and thus, promoting stability across the board, especially with regards to ongoing Brexit activity.
It is certainly a superb level to be selling the pound, compared to recent positions. It should also be noted that market volatility remains high and short term dithering whilst waiting for a stronger pound, may result in disappointment. There are evident signs that Sterling has reached a level that it cannot break through and there is bound to be a high level of uncertainty over the coming few months.
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