| GBP |
| The headline is very clear as far as GBP v EUR is concerned.. The Pound is trading at the highest point in 34-months against the Euro. €200,000 would have cost you £3,000 more just 1-month ago, £5,000 more at the beginning of the year and a huge £8,000 more 11-months ago.. Is this a refection of what could be ahead for GBP v EUR? Probably not.. Since June 2016, GBP v EUR has seen a high of 1.21 and a low of 1.06. With mid-market currently hovering around 1.18, the pair is trading at the very top of all trends, ranges and forecasts. Yes, things may improve some more in the short-term (if the pair hasn't already run into overbought territory), but coming from someone who has over 15-years experience in the industry, overall GBP v EUR has a lot more to lose than to gain when you add the multiple variables at play with the above. Last week, the ECB blocked any further gains against the Euro after announcing no forward guidance on interest rates. At this point, GBP v EUR was trading at a favourable high of 21-months. 0.5% has been made since then, which represents a further 13-month high (August 2022). Hence why it will take something gigantic for further upside.. This week sees important economic figures for the UK with labour data and GDP. EUR Wow, what a weekend in Europe! Historic marches against tourism in the Balearic islands and the 'far-right' movement sweeping victory in the polls, causing Belgium's Prime Minister to resign and France's President to call a snap election. Politics could be about to overtake interest rates in being the key market driver. The unexpected uncertainty has caused an immediate devaluation in the Euro. A snap election creates political uncertainty until it has either been resolved or the new party stake their claim to calm stormy waters (which can take months). The timing of Macron's decision is an interesting one with the Olympics being held next month in France, which could have been a distraction if run well. The market currently believes Macron will lose the vote at the end of this month which would tee up an interesting 2027 when the next French Presidential election runs (59% v 41% last time). EU Parliament therefore could soon be split in 2 with the so called 'left-wing' factions in place in the Scandinavian countries and 'right-wing' factions in place in Germany, France, Belgium, Austria and Italy. A battle of power within the EU looks set to begin and this kind of uncertainty can be deadly.. USD Beyond politics, the US posted more jobs than forecast last Friday forcing money markets to maintain the position of a December interest rate cut from the Fed. There is a Fed interest rate decision and meeting this week, but it is scheduled to be a non-event. Inflation is released on the same-day which is expected to come in slightly lower. |
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