Strong G10 FX seasonal trends in April led by GBP/USD - ING

According to Viraj Patel, Foreign Exchange Strategist at ING, G10 currency pairs have historically exhibited strong seasonal patterns in the month of April with GBP/USD at the top of the list as it has posted a positive move in April across each of the last 8 years.

Key Quotes

“The average performance since 2010 has been +2.20%, while over the past 5 years the average has been +2.35%. We think the cards are aligned for GBP/USD to post a similar bullish move this month - not least as cyclical economic factors also favour a move higher in the pair (see our note GBP remains the comeback kid of FX markets). We target GBP/USD moving to 1.45 in 2Q18.”

“Across the other currency pairs, EUR/CHF has shown seasonal tendencies in the last 5 years (posting an average +2.15% move higher). Equally, we note EUR/USD has moved higher in each of the last 5 Aprils (posting an average move of +0.90%). This suggests greater risks that EUR/USD moves up to 1.25 in the coming months.”

“More broadly, we note that April is typically a bad month for the US dollar. The Bloomberg Dollar Index (BBDXY Index) has posted a negative move across each of the last 7 Aprils - with an average move lower of -1.60%. With weak USD expectations embedded in markets, one could see this coming April also being negative for the currency.”