Excel Currencies Blog

Sterling hits overbought territory versus Euro..

The Pound extended a 6-month recovery against the Euro last week, gaining four out of the five trading days. A 2023 high of 1.1670 mid-market was briefly achieved last Thursday, in what has been a very good 6-week or so period for the pair.

Nearly 1-cent has been lost since that high though, which tells us the run on the Euro was pushed into overbought territory last week (as is the way most of the time in run scenarios). Still, the pair trades at extremely favourable levels and you would be achieving €3,400 more on a £100,000-€ exchange compared to just 30-days ago. 


EUR
The past month or so has been tough for the single currency, as the region sees its inflation number fall faster than anticipated. With inflation headed lower and seemingly under some control now, there is no need for the ECB to rate hikes much further, which is counter-productive for a currency's value. 

The Euro-Zone once again releases the main economic data for the week ahead with its GDP number. Things didn't pan out too well last time and it's really a 50-50 call as to what happens this time round. Anything less than the forecast 0% growth for Q1 could prove trouble for the €.


USD
With the US debt ceiling issue now a thing of the past, more conventional drivers can once again lead the market. The main one being central banks and interest rates. The Fed have come close to stopping its hiking cycle for 2-months in a row now and this month could 3rd time lucky. 

Friday's job report had something for everyone as people in jobs had risen, but the overall unemployment rate also rose to its highest level since 2010 (excluding covid). The latter being the main trigger for an end to interest rate hiking. The week ahead looks impossible to call with no major US data due.