GBP now up 3% against the Euro in the last month, time to move?
| GBP
| The Pound is stronger versus a weaker Euro today after news this morning of a 90-day suspension of tariffs between the US and China. We have been asked many times "why?" today, so here is a VERY quick explanation..
GBP v EUR has an inverse correlation with financial market volatility.
To expand a bit further, this comes to the safe-haven and emerging currency statuses that I have been writing a lot about recently. The Euro is an ever-growing safe-haven currency and will gain value when 'problems' in the world arise and it will lose value when these 'problems' are squashed. The Pound is simply the opposite.
Going into the why will take too long to explain and it doesn't really matter, all that matters is when you see and hear of global stocks (especially) performing well, you can bet the Pound is following suit.
GBP v EUR is now trading above the years average and so in that sense is a 'favourable' time to buy. I think the last month's performance on it's own is a reason to buy too, but for those with exchanges in the pipeline that decision is yours to make.
GBP v USD has lost ground on the US-China news and moves to a 1-month low. 2% has been wiped off its value and if more US trade deals are secured, further declines are expected. Whilst the USD is the world's most traded and 'safest' currency, the Trump tariffs have caused tremendous uncertainty in the US and its currency has weakened as a result. Still, buying the pair now or even 2% lower than today is still great value in the grand scheme of things.
The UK offers plenty of important economic data releases this week and so expect a choppy week ahead.
EUR The Euro has devalued across the board from the US-China news, but has gained value against both the CHF & JPY (0.3% & 0.8%). This highlights the pecking order of the safe-haven currencies. Euro-Zone GDP is a key release this week, but the main events really lie elsewhere.
USD The USD has gained significant value against all currencies apart from the Chinese Yuan today. US stock markets have jumped as a "total reset with China" was announced from the US. Beijing has cut tariffs to 10% from 125% and Washington to 30% from 145% and both Presidents are expected to meet at the end of the week.
A de-escalation in this trade war, India-Pakistan and potentially Ukraine-Russia makes for of course a better world, but also a highly improved trading environment and one that could see GBP outperform. |
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