Forex Weekly Round Up 27 April 2015 – 1 May 2015
On Monday, according to a report by the British Chambers of commerce, the majority of British exporters saw their sales grow last year. 59% of businesses sending their goods overseas recorded sales growth in 2014. Director General of the BCB, John Longworth, said while he was encouraged by the results, politicians needed to do more to support new exporters and close Britain’s trade deficit.
Tuesday brought news that Britain’s economy slowed sharply in the first three months of 2015, gross domestic product grew by 0.3% January-March, the slowest quarterly rate since the end of 2012. The UK’s initial estimate of Q1 GDP growth was 0.3%, below expectations for a 0.5% expansion, and half the pace of Q4 2014 growth. Sterling initially fell on the disappointment but quickly recovered.
We also saw an incredibly disappointing GDP figure from the US, with the QoQ growth coming in at 0.2% against a 1.1% consensus, which was the lowest growth figure since June 2014. Treasuries and US equities both initially saw a knee-jerk reaction, however, the moves were not sustained, as the statement did not hint at a change in policy stance.
The Euro strengthened against a host of currencies on Thursday after the Euro-zone ended four months of deflation in April with consumer prices unchanged from last year’s levels, removing the threat of persistent price declines as energy costs pushed up in the month.
Analysts had begun questioning whether the ECB will need to carry out quantitative easing all the way through to September 2016, the data suggested otherwise which boosted the currency.
Our analysis of the markets in 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.