Weekly Market Update 22/08/2017 (GBP Edition)

Is Parity on the Way ?

Rewind back to last year, its Pre-Brexit and a buoyant pound is hitting the highs of 1.40 against the single currency and pushing 1.50 against the USD. With leave/for campaigns doing their best to undermine and deceive the general public; we saw a shock decision which resulted in instant turmoil for the pound. At the time, the ramifications for the economy weren’t apparent with the FTSE and stock prices strengthening in the days after the vote.

Fast forward back to today, and we are beginning to see a correlation of the crash of 2008.

As you can see from the both trend lines, the bottom of GBP/EUR (1.0156) hasn’t seemed to have hit yet, but we are most certainly on our way. Cable is a different story, GBP should be a lot lower at present but political unrest and presidential instability has kept the rate above 1.20… for now. (2008 low 1.36)

Protection

So what can one do to protect themselves from a falling pound? Well, for a start those holding on for a better price may wish to start putting their ducks in a row sooner rather than later. We expect further rounds of poor Brexit negotiations coupled  with an already very strong EU QE programme; it only points downwards in the short/medium. For those looking at buying the pound, we would suggest and recommend stage buying your currency taking advantage of each movement down as not to be caught out by a sudden spike the in opposite direction.

The currency market is the most volatile market place on the planet. With over 5 Trillion USD being pushed through daily. Acts of god, terrorism and stock market crashes are a catalyst in moving the markets (depending on what part of the world the incidents take place).

Market data or fundamentals of a region/country are the second factor. Key data such as unemployment, inflation and retail sales give investors insight into where the economy of each Geo-location is going. This in turn directly correlates into the currency market, by either strengthening  or weakening a host currency.

Do you have an up and coming transfer to do? If So…Are you correctly positioned?

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