Dollars, Pounds & the Euro
With all the (wholly deserved) negative sentiment directed at Sterling as a result of the extraordinary incompetence of the UK Government, it is unsurprising to see cable on its lows for the year at 1.2850. What is surprising though, is the relatively good performance of the Euro. The Brexit fiasco causes as much uncertainty within the remaining EU nations as it does to the UK, and EU tariffs remain very much in focus with regards EU/US trade. We’d expect to see slightly more downward pressure on EURUSD, and potentially a loss of momentum for the EURGBP rally also. EURUSD will need to overcome significant resistance above 1.1630 in order to invalidate this opinion. There will undoubtedly be support on any dips, particularly in the 1.1550/60 area, but we’d like to see a test of this anyway. EURGBP is a little trickier to call, especially due to the current weak UK leadership, but it is interesting to note that some senior politicians are now in open disagreement with the Prime Minister. Those who are long of EURGBP could do worse than take some profits here, as the benefits of a change in leadership are likely to give Sterling a welcome break.