Air of uncertainty encapsulates the market

The past week has seen movement of a slightly less volatile nature than what we have seen in recent weeks for the Sterling-Euro cross, with a 1.8% shift between the highs and lows of the week, to put this into monetary terms it would mean a difference of £3,600 on a £200,000 trade. Sterling began the week strongly, anticipation of a change of government hanging optimistically in the air leading up to Thursday’s groundbreaking televised debate between main party leaders. Despite common belief that the policies revealed in this would have an affect on the market, we have actually seen very little change, mainly due to a lack of any hard financial policy being revealed. That said, Nick Clegg’s performance could prove to have a huge impact, if the Liberal Democrats receive a higher percentage of support in the opinion polls, fears of a hung parliament will undoubtedly have a negative impact on Sterling.

Tuesday saw the release of the Trade Balance by the Office of National Statistics, this is a balance between exports and imports of total goods and services in the UK. A positive value shows trade surplus, while a negative value shows trade deficit. The actual deficit revealed was a lot smaller than was initially anticipated at -2.1billion. This produced some volatility for GBP but was not of great significance. If a steady demand in exchange for UK exports had been seen, it would have turned into positive growth in the trade balance, causing further positive movement for GBP.

This coming week is set to produce several significant data releases. On Tuesday the Consumer Price Index (CPI) is released by the Office of National Statistics, it is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of Sterling is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the Pound, while a low reading is seen as negative (or Bearish).

The Gross Domestic Product (GDP) released by the Office of National Statistics is a measure of the total value of all goods and services produced by the UK, this is released on Friday. The GDP is considered as a broad measure of the UK economic activity and health. Generally speaking, a rising trend has a positive effect on the Pound, while a falling trend is seen as negative (or bearish).

With these impending releases, an air of uncertainty encapsulates the market, meaning it would be the ideal time to lock in a rate with the Foremost Currency Group through means of a forward contract or placing a stop loss or limit order,   allowing your currency to be traded at a specified rate to protect against any unfavourable movement. Please contact us for further information on how these tools can be implemented.

Security in your currency exchange is paramount in such unpredictable times and this is provided by a forward contract, where you can lock in a rate for up to two years. Those with impending purchases in the Eurozone might look to consider booking a Forward contract with the Foremost Currency Group. By placing a 10% deposit, clients can eliminate the risk of an unstable GBP/EUR rate by locking in a price today for a transaction that will take place in the future, up to maximum of two years.

With all of these factors in mind, it is of utmost importance to speak with your specialist account managers to ensure you know all of the options available to you, ensuring you can make the right decisions when it comes to exchanging your currency, please feel free to contact us for a free consultation.