21/11/2016
CURRENCY FORECAST | WEEK OF 21 NOV 2016
Can the pound continue its recovery?
At the moment the US Dollar is still in focus. Its strength against the Euro certainly helped STG/EUR rise nicely to near the 1.17 mark before falling back to mid 1.15s late at the end of the week. Even though the Pound is at good levels against the Euro, and not bad against the Dollar, there is still a great level of uncertainty regarding the UK, especially about the economy.
Economic figures are not too bad, but are not that convincing. There is still a lot of unease regarding Brexit, and although Sterling is having a good run, the market overall still has a bearish feeling about it. We can see this point of view, but really don't think we will revisit 1.10 in the near future. We do think the Pound will eventually go lower, but prior to that we could well have a rise above 1.18 again.
There is also a first UK budget this week for Chancellor Philip Hammond. Don't expect the pound to react too much to this, unless of course there is a comment that surprises the market. There is also the Thanksgiving holiday in the US, so liquidity will be quite thin which can lead to further market volatility.
The range this week should be 1.15 to 1.17. On the downside, a break of 1.15 will lead to the rate moving down to 1.14. If we were to break higher, then 1.18 is the short term target. For us, we feel Sterling will probably take a breather and stay solid within that range. It certainly isn't the time to be greedy, so late 1.15s and 1.16 is not a bad level to buy currency.
Look out for any major news and, of course, the budget. Although we don't feel the pound will be affected by this event, you never know! The good times of a rising Pound are not quite back yet, but at least the recent move higher has added some more stimulus to the market and also instilled a little more confidence in the currency.
Have a good week .......
(by Premier FX...)
