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Daily News from Senior FX Analyst – Samuel Allen

Sterling has seen another day of rises against the majority of the currencies it is paired against. Showing almost 2% gains against the Swiss Franc and 1.6% against the Japanese yen. Both currencies have benefitted from risk aversion which has dominated trends over the past year and as risk appetite returns to the markets the perceived safe haven currencies will be the first to suffer.

A report by the confederation of British industries has shown that retail sales in the UK have grown at the fastest pace for 3 years. The Euro has also benefitted from a return of risk appetite, coupled with the recent stress test results and has risen to a 3 month high against the USD today. The pair was unable to hold above the 1.3 level of resistance which could signal a retracement back to at least the 21 EMA at 1.2786 which could provide dynamic support if the uptrend does continue into the medium term.

Looking forward this week there is a good amount of data out from Australia overnight, which will include their inflation data (CPI) expected to come in at 3.4% which should encourage another rise in interest rates at the next RBA meeting. This should help to strengthen the AUD overnight and buyers looking to convert from GBP to AUD should at least consider having a stop in the market to protect them from adverse movement.

This is followed by New Zealand’s interest rate announcement on Wednesday evening where an expected rise to 3% benchmark could bring support to the Kiwi as its yield advantage rises against currencies like the Japanese Yen and USD.