Whats the outlook for GBP – Lumon £/$ & £/Eur insights

Lumon on Jan 11, 2022 2:18:34 AM

Monthly GBPUSD Intelligence

Monthly GBPUSD Forecast

The forecast below was extracted from Reuters Eikon and highlights the view of over 40 financial institutions. The chart shows the High, Low and Mean forecast from a institutional view.

GBPUSD Forecast

GBPUSD in Current 2021 Range

The indicator below highlights where the currency pair is currently trading at in the calendar year range, putting more context on whether now is a
good time to transact.

GBPUSD Spot Vs 2021 Range6-Month Forecast Distribution

The histogram below explains the 6-month currency exchange forecast from above to highlight where the distribution of the forecasts to put further context into the 6-month market view. For example, amongst the 40 plus forecasters, 7 are predicting GBPUSD will be between 1.37-1.38 in 6 months time.

GBPUSD 6 Month Distribution of ForecastHeat map

The below heatmap highlight the view from the options market based on the cost to protect particular levels over a said timeframe based on current sentiment . This highlights the current bias in the market based on sentiment. The data is extracted from ICE Futures.

Probability Type

Monthly GBPUSD Intelligence

Economic backdrop

In November, Sterling weakened following the Bank of England (BoE) Meeting where a large proportion of market participants had been anticipating a interest rate hike. The BoE decided to hold rates and articulate upcoming data in more detail, especially with furlough recently ending. The commentary and data appeared to support the notion of a hike in December, but the added complexity of Omicron has reduced the likelihood of this scenario happening. In addition, the ongoing tensions surrounding Brexit continue to rear their ugly head.

In the meantime, economic data from the US has been consistent with the FOMC’s projections. This has resulted in expectations growing that we may see an acceleration in the pace that the FOMC taper their quantitative easing measures.

Key data releases and events this month

Date-Release

Data Analysis

The most recent forecast has shown a longer-term view (12 months) of the highs and lows converging from 1.5100 and 1.2270 into 1.4700 and 1.2400. The mean forecast continues to trend higher in the long term.

However, GBPUSD is currently in lower echelons of the 2021 range as recent developments have hindered Sterling sentiment.

Looking at the heatmaps, the bias on GBPUSD is tilted to the upside on the short/medium and long term.

Bespoke requirements

These are some of the data sets and indicators that we use to support businesses when formulating policy and/or making decisions on when to transact, how much to transact and how far to hedge.

If you are looking for some bespoke analysis and information to support your decision making, please feel free to discuss with your Lumon Account Manager.

 

Monthly GBPEUR Intelligence

Monthly GBPEUR Forecast

The forecast below was extracted from Reuters Eikon and highlights the view of over 40 financial institutions. The chart shows the High, Low and
Mean forecast from a institutional view.

GBPEUR Forecasts

GBPEUR in Current 2021 Range

The indicator below highlights where the currency pair is currently trading at in the calendar year range, putting more context on whether now is a good time to transact.

GBPEUR Spot Vs 2021 Range

6 Month Forecast Distribution

The histogram below explains the 6-month FX forecast from above to highlight where the distribution of the forecasts to put further context into the 6-month market view. For example, amongst the 40 plus forecasters, 10 are predicting GBPEUR will be between 1.20-1.21 in 6 months time.

GBPEUR 6 Month Distribution of Forecast

Heatmap

The below heatmap highlight the view from the options market based on the cost to protect particular levels over a said timeframe based on current sentiment. This highlights the current bias in the market based on sentiment. The data is extracted from ICE Futures

Probability Type - EUR

Monthly GBPEUR Intelligence

Economic backdrop

In November, Sterling weakened following the Bank of England (BoE) Meeting where a large proportion of market participants had been anticipating a interest rate hike. The BoE decided to hold rates and articulate upcoming data in more detail, especially with furlough recently ending. The commentary and data appeared to support the notion of a hike in December, but the added complexity of Omicron has reduced the likelihood of this scenario happening. In addition, the ongoing tensions surrounding Brexit continue to rear their ugly head.

In the meantime, the single currency continues to lag behind the UK in terms of the interest rate outlook with no hikes being forecast for 2022. The European Central Bank (ECB) currently view inflation as transitory which has resulted in a prolonged period of weakness from the currency.

Key data releases and events this month

Date-Release-EUR

Data Analysis

The most recent forecast has shown a longer-term view (12 months) of the highs and lows diverging from 1.2346 and 1.0870 into 1.2500 and 1.0870. The mean forecast continues to trend higher in the long term.

However, GBPEUR is currently in upper echelons of the 2021 range as the ECB lagging interest outlook continues to weigh on the single currency

Looking at the heatmaps, the bias on GBPEUR is tilted to the upside on the short terms; but the bias changes to the downside in the med and long term.

Bespoke requirements

These are some of the data sets and indicators that we use to support businesses when formulating policy and/or making decisions on when to transact, how much to transact and how far to hedge.

If you are looking for some bespoke analysis and information to support your decision making, please feel free to discuss with your Lumon Account Manager.

 

This document is intended to provide you with information on the services Lumon Pay Limited (LPL), Lumon Risk Management Ltd (LRM) and Lumon FX Europe Limited (LEL) offer and should not be interpreted as advice or as a solicitation to offer to buy or sell any currency or as a recommendation to trade.

Lumon Pay Ltd (“LPL”), trading as Lumon, is a company registered in England with its registered address at Building 1, Chalfont Park, Gerrards Cross, Buckinghamshire SL9 0BG. LPL is authorised by the Financial Conduct Authority as an Electronic Money Institution (FRN: 902022).

Lumon FX Europe Limited, trading as Lumon, is regulated by the Central Bank of Ireland. Lumon FX Europe Limited is registered in Ireland. Registered address: 98 Lower Baggot Street, Dublin 2. Registration No. 631617.

Lumon Risk Management Ltd ("LRM"), trading as Lumon, is a company registered in England with registered number 06333730 and registered address at Spaces, Building 1 Chalfont Park, Chalfont St. Peter, Gerrards Cross, England, SL9 0BG. LRM is authorised by the Financial Conduct Authority as an Authorised Payment Institution (FRN: 567835) for the provision of payment services. LRM is also authorised and regulated by the Financial Conduct Authority as an investment firm (FRN: 671108).