Volatility is still the key…
The markets have been volatile. Away from STG/EUR, the other major currencies have moved quite a lot. STG/USD is still hovering above 1.24; but, it seems, if we break that support we will move down through 1.20. If this does happen and EUR/USD moves up or stays steady, then this will cause STG/EUR to move lower, towards 1.14 and maybe beyond.
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Timescale for this? It’s really difficult but it could well take a few months and, in between this, the volatility will kick in, and you will see moves both up and down. It seems Sterling last week and probably this week, is at the mercy of the other currency moves. The USD moves every time there is a noise from the White House! And, the Euro seems to be concentrating on its own agenda.
So how is it we got to 1.18? It’s not a bad level to buy currency in these markets, especially if the future of STG/EUR seems to have a downward bias. We do not think we will see 1.20, but as we have mentioned before, we may see a slight move up before it looks to go lower.
There is still quite a lot of uncertainty out there for the Pound. No one really knows what will happen once Article 50 is triggered. By the way, it will still take some time to remove the UK from Europe; Article 50 is just the start of the process. However, as always we will still see many opinions, comments and suggestions that will make the currency move. Of course, be aware of this, but don’t get too stressed about it. It’s going to happen, and a lot of it is basically wait and see, especially from the currency point of view.
Not much event risk this week but we cannot see it getting to near 1.19, and maybe this week there will be a little bias to the downside. The first support is 1.1650 so watch that level fairly carefully.
Have a good week, keep smiling, and hopefully we may also see some sunshine!!!
The Premier FX Team.
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This article was updated on the 27th of February, 2017.