Forex Weekly Round Up 25 May 2015 – 29 May 2015

The bank holiday weekend provided a relatively quiet start to the week for the pound. Friday saw the public sector net borrowing figure come in at £6.038bn against a £7.9bn consensus, far better than expected.

Sterling hit its weakest point against the dollar since the aftermath of the UK’s national elections, after a speech by The Queen set in motion a referendum on the UK’s membership of the European Union. A EU referendum by the end of 2017 is among a programme of new laws in the first Conservative Queen’s Speech in nearly two decades.

Gross domestic product rose 0.3% in the first quarter, matching an initial estimate, the Office for National Statistics said in London on Thursday. It was less than the 0.4% increase forecast by economists, however.

The bank holiday weekend also saw the release of US CPI, with core CPI being the highlight showing an increase of 0.3% against a 0.2% consensus month-on-month, which caused a rally of the dollar.

US Census Bureau data, on Tuesday, showed total durable goods demand declined 0.5%, as forecast. The drop in demand for total durable goods, which are goods that should last three years or more, followed a 5.1% jump in March that was the biggest since July and greater than previously reported.

Applications for US jobless benefits remained below 300,000 for the 12th straight week, signaling the US labour market remains firm despite how slow the economy has been to rebound from a first-quarter slump.

Analysis of the markets for the next three months is further weakness in the Euro and strengthening of the Dollar. Weakness in the Euro is good for those who are buying Euros and Dollar strength is better for those who are selling Dollars. The currency markets are liquid and volatile, so we may see movements outside this pattern.

Those looking to buy Dollars and sell Euros should consider a forward contract to hedge against adverse movements in the long term. Please contact us for your free, no obligation FX comparison.