GREEK ELECTIONS, EURUSD TO HIT PARITY, LOW OIL PRICES, GBPUSD TO HIT 1.40?

Last week was a very volatile week on the markets with GBPEUR hitting 1.28 again, GBPUSD being as low as 1.50, and EURUSD being as low as 1.17.

At this stage it is important to know that expectations of certain currency pairs are as follows;

GBPUSD- 12 month forecast- 1.40-1.45

EURUSD- 1-1.05

As you can see from above, EURUSD has been forecasted to hit parity this year, this is mainly due to the fact that while the Eurozone is trying to still kick start their economy, they are still planning to have a massive QE injection this month, and are facing a possibly Greek exit- On the flipside the U.S are a stronger economy with interest rate hikes on the cards possibly in Q2 of this year.

For those of you who are looking for a forecast on GBPEUR, right now it is tough to give accurate figures due to the fact that we also are going to have an election in the UK this year. As many of you know, the markets don’t just move on economic data, it also moves on political news and speculation. With the chances of Labour or UKIP taking the place of Conservative in the UK, there will be a lot of uncertainty leading up to the June elections, which is never good news for the stock market. It is also helpful to know that interest rates in the UK, historically have never gone up 6 months prior to an election, so those of you who are bullish on the UK doing an interest hike, I would probably take a rain check on it until after the elections, if there was an interest rate hike now, with the current low levels of inflation, the economy would go backwards and Conservatives wouldn’t have a chance of coming back to Downing Street.

The start of this week will be pretty quiet as far as economic data is concerned, Tuesday we see the inflation figures from the UK released, now BoE has already warned us to expect weak levels of inflation for the time being before they go up due to low wages and oil prices dropping, so if you are selling Sterling, I would probably look to do so before Tuesday as we may see Sterling weaken off.

As ever, if you are looking to trade a particular currency pair and would like analysis or my thoughts on your transaction then please don’t hesitate to contact me for a free consultation, I can guarantee an unbeatable exchange rate and if you have been following my blog then the analysis will speak for itself.

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