ACM Update 17 July 2017

The Summer social calendar is lighter for another year. Pimms and Strawberry sales will likely decline this week after the end of Wimbledon with Federer proving himself a true great. Lewis Hamilton won Silverstone once more putting himself in with a chance of proving himself a true great in the coming years. Will Sterling prove herself a true great later this week and climb the currency ladder? Hmmm. Whilst the aforementioned scale great heights in single bounds, I feel Sterling will limp slowly higher like a wounded asthmatic climbing Everest.

Why will Sterling struggle to move higher? The gains made last week against both the US Dollar and the Euro were largely down to those currencies weakness rather than any sustained Strength in Sterling. Indeed, we moved over 1% higher on Cable (GBP/USD) and Sterling/Euro last week.

You can view the movements on Sterling/Dollar below –

Why was the Dollar sold off? I think we can now take for granted that there will always be some political catastrophe waiting round the corner in the US. The Trump administration seem destined for ongoing shenanigans akin to the Netflix series House of Cards. That’s one reason.  Another few reasons are the inflation and retail sales figures out of the US. Inflation came in at 1.6% and Retail Sales fell by 0.2% last month against a consensus estimate of a jump of 0.1%. Consumer sentiment is also off. This weighed on the US Dollar.

In addition, we had the Federal Reserve Chairperson, Janet Yellen speaking. Her tone was slightly dovish so this dampened rate hike expectations for the remainder of 2017. I expect this tone to continue over the summer months with words like ‘gradual’ and ‘steady’ in relation to rate hikes. The dollar sell off helped EM (Emerging Market) currencies like ZAR and TRY rally. Another winner was the Aussie Dollar gaining over 1% against the US Dollar.

Where do I expect Sterling/Dollar to go in the next few months? I expect Sterling to come under further pressure over the coming months. Our Brexit ‘strategy’ is looking far from aligned at present with the Government doing its jolly best to send out mixed and confusing messages. Still, having listened to the Shadow Business secretary over the weekend I think we’re going to have to stick with the current incumbents to see this through. Data out of the UK recently hasn’t been all bad. The employment rate jumped to a record high and people out of work fell to the lowest level since 1975. Inflation however is at 2.9% and with wage growth stuttering this is going to start hitting the man on the street in the pocket. “What’s that got to do with the price of fish” is no longer just a phrase.

If you are USD buyer from Sterling lock in some currency at current SPOT prices or alternatively out on a short dated forward contract for the next three months. I would look at covering off a sizeable portion of your current exposure around the 1.30 mark. Please contact the Trading Department for a rate of exchange on both a SPOT and Forward Contract basis.

What do we have out this week that will move Cable (GBP/USD)?  We are light on US data after numerous releases last week. Any movements on Sterling/Dollar will be due to inflation data out of the UK on Tuesday, CPI (YoY and (MoM) (Jun) with expectations at 2.9% and 0.2% respectively. We also have the Bank of England Governor, Mark Carney, speaking on Tuesday. EUR/USD price action is also likely to move Sterling/Dollar with the stand out market event this week being the ECB press conference.

Sterling/Euro

All eyes will be on Mario Draghi this week. After his last press conference and language used the single currency turned bullish. EUR/USD moved from fighting the 1.12 level to now trade above 1.14 with eyes on another leg higher to the psychological level of 1.15 the figure. Will we get another strong performance and in turn see the Euro and bond yields push further higher? I have my doubts. I think Draghi will be more considered with the language he uses in relation to signals on monetary policy. Will a fixed date be set on when the bond buying program will be wound down? I expect Mario Draghi, the ECB president, to cool markets and expectations on tapering. I’d expect any announcement after the summer months. This ‘steady’ and ‘gradual’ language and approach will likely see the Euro weaken off slightly.

If you are a seller of Sterling and buyer of Euro’s then do consider firstly taking advantage of the move higher last week in Sterling/Euro. Please view the movements on the graph below –

We were trading in the 1.12’s last week so if you have any SPOT transactions to make consider taking advantage of the percent or so move higher. Please contact the Trading department for a rate of exchange. Also, consider placing orders in the market to take advantage of any volatility around inflation data out of the UK tomorrow or the ECB press conference on Thursday.

If you are a EUR seller and didn’t take advantage of the moves into the 1.12’s last week please get in touch and we can structure something for you to take advantage of any dips lower.

If you have any questions please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update 10 July 2017

Sing a song of six pence, in Jamaica you can get a steak and kidney pie for the exchanged equivalent of £1.75, a chicken and mushroom pie for £1.60 and an apple pie for £2.15. In St Kitts and Nevis a steak and kidney pie will cost you £2, and a cherry pie can be yours for the equivalent of £1.95. In Trinidad and Tobago, that steak and kidney pie comes in at £2.50, but you can get two for £3.50. Their apple pies and cherry pies are often sold for £2.75, with a combination of any two going for £4.75. Mince Pies are largely unavailable, except by private arrangement and imported from London and Brighton. Those, ladies and gentlemen, are the Pie Rates of the Caribbean (with thanks to Graham Williams) and so begins our week.

GBP/USD

I was going to lead with something on the G20 but opted for a short moment of mirth, now we must get back to business as GBP has continued its dive since last Friday morning. An early sell off in Asia (again) this morning continues what appears to be the realities of Brexit woes coming home to roost like four and twenty black birds. All three PMIs reported softer growth for the UK in May so Mrs May has made a (potentially desperate) bid to the Labour leadership to rally with her towards the negotiations with the remainder of the EU. In the US, there was mixed news on the employment front, as Nonfarm Payrolls rebounded to 222k but wage growth remained weak.

Whilst the UK shows signs of flagging, the Fed is on record that it intends to raise interest rates a third time in 2017, even though the markets have their doubts, as inflation remains weak and second quarter numbers in the US have not exactly been baked in a pie. If you are planning on buying USD you may want to fix a forward contract to guarantee the rate of exchange later in the year as Sterling/Dollar may well move lower.

GBP/EUR

We have already seen the market open this morning at a crust over 1.13 and continues to blip around the same level. Poor manufacturing data released on Friday, reminded us that data still has the power to influence moves in a currency pair that has suffered more from politics than anything else for some time now. Employment data out on Wednesday will be looking for wage growth if GBP is to have any revival. Anything below 1.8% will mean bad things for Stirling as confirmation of inflation wearing away the benefits of earnings. To be fair, the writing is on the wall for GBP this week and in the UK we may yet have to suffer more humble pie.

With a downward trend the most likely for GBP, you might want to consider de-risking your outlook for EUR and trading at spot rates as early in the week as possible. For EUR sellers the end of day figures are the most relevant and will provide some indication of how far the assault on GBP will go. Placing a market order would help us to help you hit your target pricing.

EUR/USD

This currency pair has begun this week much the same as it ended last week, hovering around or just below the 1.14, shedding almost half the gains made last week. The ECB continues to try to balance the view, but sometimes confuses markets. An ECB official said that tapering has not (yet) been discussed, sending EUR down. Later, the ECB meeting minutes showed that they had considered removing the easing bias, allowing for a recovery. German retail sales beat expectations while factory orders disappointed. PMIs were mostly positive. In the US, the Fed is also split around the timing of the balance sheet reduction as doubts about the third hike in 2017 persist.

Germany (the economic powerhouse of the Eurozone) releases trade balance figures today and is likely to show an increase in the already huge trade surplus, like a pocket full of rye, for the month of May. This is likely to lead to a commensurate trade balance announcement from the ECB on Friday. Timing your transactions is key. Please contact me or a member of the trading team to discuss your upcoming requirements in detail.

Not trading your currency is still a risk. The markets will move, volatility and relative values will vary but whatever your foreign currency exchange and international payment needs are, you can rely on the team here at Aston Currency Management. Please do not hesitate to get in touch with us, we look forward to hearing from you. Now, if you will excuse me, I have to help the maid find her nose. Have a great week.

Written by Damien Lipman

 

ACM Update 26 June 2017

Another eventful week on the currency markets last week and I expect this one to be no different. Can Sterling get the job done and sustain a move above 1.30 the figure on Cable (GBP/USD)? Will it huff and puff and then fall slightly short? Like the British Lions, let’s hope for the former.

The Euro is the poster boy of FX markets at present. The single currency hit yearly highs last week after commentary from the ECB President, Mario Draghi. The Eurozone has been consistently publishing stronger data over the past few months and their economy has now moved out of a deflationary to a reflationary environment. He’s optimistic on the growth outlook for the region so investors are now backing the Euro in the ugly parade against both Sterling and the US Dollar.

EUR/USD had been fighting consistently with 1.12 the figure over the past month. We have now broke through that range and printed above 1.14 the figure. Are we going to see a further push higher and break through the psychological level of 1.15 in upcoming trade?

If you have a requirement to convert Euro’s into US Dollars please consider covering off some of your exposure on a SPOT basis. Feel free to contact the trading department for a rate of exchange. That way, you take advantage of around a 2% move in your favour compared with where we were a few weeks ago.

Where now for Sterling/Euro? I have been negative Sterling for a while and recent data and releases haven’t changed my mind. The key release this week for me from a UK perspective will be the inflation report hearings that are due out tomorrow. We are data heavy this week so I expect renewed volatility. Going into the summer months there is less liquidity in the markets so moves can be more pronounced and exaggerated than normal. If you are off to the beach for a few weeks to douse yourself in Hawaiian tropics then make sure you have covered off any requirements before then and have some protection in place. (That’s FX protection not UV protection).

You can view the movements on Sterling/Euro on the graph below –

GBP/EUR 1 Week

Sterling was heavily on the back foot last week with interest rates being the hot topic at present. Will we now move out of a low global interest rate environment? The US has raised their rates so will the UK follow suit sometime soon? Sterling got some gas in the tank after the BoE Governor Carney said he would consider raising rates if he saw a sustained increase in business productivity. For me, I don’t think we’ll see a rate rise anytime soon from the UK. This will keep Sterling on the back foot over the coming months. With inflation running away quicker than Ben Johnson in a 100M sprint then I think GBP is going to be subdued for the summer.

If you have a requirement to purchase Euro’s from Sterling I would look at purchasing some on a market order at 1.14. Please contact the Trading department to implement an order at the suggested level. By the end of the summer I don’t think under 1.10 on GBP/EUR is out of the question so do make sure you have covered off a percentage of your exposure at current rates.

Selling Euro’s back to Sterling? We have the ECB (European Central Bank) meeting on Tuesday and Wednesday so look to have some orders in the market before we receive the commentary from these meetings. I think the Euro has further upside so consider staggering market orders to the downside from 1.1350 to 1.1250. If you have some time on your hands look at 1.12/1.11 and at a push 1.10 the figure over the coming months.

Sterling/US Dollar

Our cousins across the pond will be lighting fireworks tomorrow to celebrate another year of independence. Will the data this week out of the US give the dollar a boost? We would need to see the data come in well above expectations to see investors flock back to the US Dollar. We have the FOMC (Federal Open Market Committee) minutes released on Wednesday followed by the NFP (Non-Farm payroll) figure on Friday.

Cable (Sterling/Dollar) was under pressure last week although has since staged a recovery.

You can view the price movements on the graph below –

GBP/USD 1 Week

If you need to purchase Dollars from Sterling consider covering off a large percentage on a SPOT basis. If you can secure 1.30 on a market please consider locking in at this level. This gives you the recent high of the trading range. Remember, it wasn’t that long ago we were well under 1.25. Please contact me for a rate of exchange on SPOT or alternatively to implement a market order to the upside at 1.30.

Expectations for the NFP figure out on Friday is for 180K jobs to have been created for June. We would need a number well above 200K to give the Dollar any meaningful boost. If we are well under 180K then expect a further fall in the dollar and a rally through 1.30 the figure on Sterling/Dollar.

I expect there to be a lot of activity towards the end of this week. Please make sure you have a strategy in place to take advantage of moves in your favour and also to protect you against any adverse movements.

Any questions in the interim please do let me know.

Have a fantastic week.

 

Written by Liam Alexander.

ACM Update 26 June 2017

Mrs May fosters “confidence” and promises the supply of £1bn to Northern Ireland and the DUP’s Arlene and finalises a deal to form a government: GBP sees a slight rally. I am finding it hard not to write about Brexit as the single most important factor actually effecting GBP value as the media focus is unrelenting and thus the tail continues to wag the dog. The summary is that the Euro will be the strongest player this week with GBP still having little to keep it up except sentiment, exemplified by the Lloyds Bank Survey stating business confidence in the UK has jumped to an 18-month high of 24%. USD is the wild card for the week and for the midterm. USD liquidity has been relatively loose and now Fed rate rises may start to drain it, driving up borrowing costs and lifting the lid on debt service costs and masked risk.

GBP/USD

GBP dropped almost 2 cents during last week, before rebounding and closing the week down 70 points closing at the 1.27 line. The drop was likely caused by Governor of the Bank of England, Mark Carney’s warning against a UK interest rate increase. Chief Economist Andrew Haldane contradicted Carney, supporting a rate increase and the currency pair closed at 1.2776. Today this dropped in early trading and but with confirmation from the DUP, Prime Minister May might yet forge a better week.

This week the BoE will produce the Financial Stability Report and any unexpected risks could force GBP lower. At the end of the week the UK will announce its current account deficit and expectations exist for it to rise to GBP16.5bn in Q1 whilst there is little from GDP figures, forecast at 0.2%, to bolster GBP value against USD.

If you are buying GBP you may wish to set a market order to take advantage of moves in your favour.

If you are planning on buying USD you may want to fix a forward contract to guarantee the rate of exchange later in the year as Sterling/Dollar may move lower.  

The following graph depicts last week’s GBP/USD moves:

GBP/EUR

This is a big week for CPI numbers coming out of Europe, building to a crescendo with the culmination of all the Euro-zone figures coming on Friday, when we will also get core inflation (disappointing many in May by falling to 0.9%). An uptick to 1% is predicted. Headline inflation stood at 1.4% and here, a slide to 1.3% is projected.

The general consensus is that the Euro will continue to be the stronger of the pair in terms of relative performance over the coming week. There is little until the end of this week to cause shocks. As we move towards July a number of market positions will be closed and liquidity will begin to decrease. Taking advantage of a spot rate now for Euro buyers could help reduce exposure to unforeseen negative moves. Please do not hesitate to contact any of the team to discuss your needs.

The following graph depicts last week’s GBP/EUR moves:

EUR/USD

With USD having regained some losses last week we now anticipate ECB plans for tapering quantative easing to be kept under wraps, at least until the Germans have had their elections in September. This will not do the Euro any favours against the Dollar, which itself is buoyed by the continued hawkish fall out of the US interest rate hike. If Mario Draghi expresses worries about inflation, it will help keep the euro in check. If he focuses on strong growth, the Euro could rise. Timing your transactions is key. Please contact me or a member of the trading team to discuss your upcoming requirements in detail.

The following graph depicts last week’s EUR/USD moves:

Not trading your currency is a risk. The markets will move, volatility and relative values will vary but whatever your foreign currency exchange and international payment needs are, you can rely on the team here at Aston Currency Management. Please do not hesitate to get in touch with us, we look forward to hearing from you.

Written by Damien Lipman

ACM Update 19 June 2017

‘Brexit’ negotiations finally get underway today in Brussels. Does the UK now want a ‘Soft Brexit’? Does Theresa May have the political clout to change tact? Has the chances of ‘No deal’ gone up in the past few weeks? Almost 12 months on from the referendum result we have about as much clarity of thought as a sleep deprived Eskimo in the desert.

This week is relatively quiet on the data front. Last week we had a hawkish Bank of England meeting that suggests we may tentatively in the near future be moving out of a low rate environment. The UK is still battling with inflation that is set to top 3% this year. Sterling has taken a massive hit post ‘Brexit’ with wage growth hurtling lower and faster than confidence in Theresa May. This has squeezed living standards. Data from the UK over the coming months is going to be a mixed bag. What is going to drive Sterling over the summer months? It is likely going to be headlines from negotiations with Michel Barnier and the EU. I’m not expecting Barnier and David Davis to be taking a gentle stroll through Brussels eating ice cream and coming to a quick and beneficial agreement for the UK. Are we going to have to pay a divorce bill of 100 Billion Euro’s to get negotiations going to a meaningful start? We will slowly over the coming weeks start to get some idea of how negotiations are going to play out.

Sterling is going to have dips and spikes over the coming months against the Euro and the US Dollar. These moves may be severe. We had the surprising split in the MPC (Monetary Policy Committee) last week that gave a significant shove higher for Sterling. Will this shift to the upside last? I have been Sterling negative for a long time and whilst I don’t see the economic fundamentals changing for the UK anytime soon, and I still see risks to the downside for GBP, there may be a sliver of light at the end of a very dark tunnel. Do I think the steam train we are currently sitting in is going to suddenly morph into a Japanese Bullet train and come out the tunnel 10% better off? Nope. We’re going to trundle along the train tracks, stop for coal now and then and hopefully come out the other side in a better position than when we entered. The environment on exit isn’t unfortunately only shaped by us.

Sterling/Euro

With the increasing uncertainty around Sterling consider covering off some of your exposure if you are a EUR buyer from GBP. You can look to take advantage of the bounce in Sterling from last week shown on the graph below –

GBP/EUR 1 Week

Will we go back through 1.15 the figure? Potentially. Although having been trading in the 1.12’s only a week or so ago it may be prudent to lock in some of the move now. Please contact the trading department for a rate of exchange.

Selling Euro’s back to Sterling? Consider structuring market orders to take advantage of any downside moves for Sterling on the back of opening Brexit negotiations. With Emmanuel Macron completing a parliamentary majority in France the Europeans look to be pulling together with political uncertainty subsiding. This may translate into further Euro strength. If you can achieve 1.14 the figure on a market order initially then stagger orders at 100 pip intervals at 1.13 and 1.12 then these may be realistic levels to aim for in the coming months. Please get in touch with the trading department or you can contact me directly.

Sterling/Dollar

Are we heading back to 1.25 or is a move back to 1.30 on the cards? It’s going to be very much like Stoke City in the Premiership short-term. Not going to move up or down too much from their current mid-range position. EUR/USD has been hovering around 1.12 the figure for quite a while with no clear break in either direction. If we see a sustained move above 1.12 then this will drag Sterling/Dollar higher. Last week we did of course have the Federal Reserve meeting where they duly delivered on a rate rise that was as obvious as Lord Lucan is still missing. The Dollar strengthened against the single currency although it has since reversed most of the gains. Will the Fed get in hawkish mood for future rate increases and will we see a strengthening US Dollar? Potentially although there is going to be movements in either direction largely on risk events.

You can view the movements last week on Sterling/Dollar below -

GBP/USD 1 Week

If you hold Sterling I would cover off a small portion of your exposure into USD at current levels. Please contact the trading department for a SPOT rate. This removes a portion of your risk off the table short-term. I would then consider placing market orders on a GTC (Good till cancelled) basis. Please contact the trading department to discuss appropriate levels to target. We may have overnight movements that you can take advantage of that you wouldn’t ordinarly execute at during UK working hours.

If you are selling USD rates are looking competitive. Think back 12 months and where we were trading. Could we see 1.25 on USD/GBP again. Absolutely. Look to lock in a portion of your annual exposure on a SPOT basis then consider placing orders to the downside. You’ll be bored of hearing this by now although please contact the trading department or me directly to structure these.

If you’re in London this week, remember the sun cream and have a fantastic week.

Any questions please do let me know.

Written by Liam Alexander

ACM Update 12 June 2017

Mrs May has messed up and lost the previously held majority in the House of Commons. The shortfall now means a reliance on the 10 MP’s of the right wing ultra-conservatism of the Democratic Unionist Party. You would have to have been hiding under a stone to have missed the fallout of last week and many, including Mrs May, might wish they were enjoying the protection of some form of shade.

Sadly, none now exists and where we were anticipating a “strong and stable” Conservative government, capable of pushing through a hard Brexit, the now painful glare of the political sun beams through and highlights the good, the bad and the reshuffled Cabinet. We look much more likely to go soft on Brexit now as a consequence.

GBP/USD

There are expectations of a US interest rate increase, possibly this week, although the market is likely to have anticipated this, if it happens. Contrary to President Trump’s Twitter based claims, the US economy may be losing momentum with weakening wage growth and employment numbers. Despite this, since just before the exit polls of the Election last week, GBP has lost nearly 2% against USD value and as I write this the slippery slope down appears to continue.

If you are buying GBP you may wish to set a market order to take advantage of moves to USD favour. Relative to where it might go to, if you are planning on buying USD you may not yet be too late to fix forward contracts to guarantee the rate of exchange later in the year.

 The following graph depicts last week’s GBP/USD moves:

GBP/USD moves

GBP/EUR

Thursday is the day to watch this week for Euro value. The Eurozone has enjoyed a generous trade surplus thanks to German exports (EUR23.1 billion was seen in March). We now get the data for April which is projected to show 22.4 billion. This will be a telling factor when the Eurozone finance ministers gather in the afternoon and Greece returns to top the agenda. It’s a thorny topic the Germans may wish to postpone until after their elections in September but it will be nothing more than a delay of the inevitable and could be the Achilles Heel for EUR value later in the year.

In relative currency value terms we believe that softer Brexit terms will mean less short term damage to both the economy and the value of GBP. The harder we Brexit, the harder we fall. Anyone selling GBP may wish to seriously consider fixing forward rates now, in anticipation of any further decrease in value due in the near future from the uncertainty generated by the forthcoming negotiations. Please contact us to discuss this as soon as you are able.

The following graph depicts last week’s GBP/EUR moves:

GBP/EUR moves

EUR/USD

Whilst GBP suffers against EUR due to Brexit uncertainty so too does the EUR suffer against USD. What hits GBP where it hurts has repercussions for EUR as collateral damage against USD value. Even with this in mind the EUR has made steady progress since mid-April and whilst it may be a relatively flat week for the currency pair we are ready to ensure that you enjoy excellent rates of exchange when exchanging on a spot basis. 

The following graph depicts last week’s EUR/USD moves:

EUR/USD moves

It only remains for us to wish you well for the coming week. Please do not hesitate to get in touch with us, we look forward to hearing from you.

Yours Sincerely

Damien Lipman

ACM Update 9 June 2017

Not so strong and stable it seems. Unless you’ve been in a cave for the past 24 hours we have a hung Parliament in the UK. What does it mean? More confusion and more uncertainty. Will Theresa May resign? Will Jeremy Corbyn form a minority Government? What deals are being done in Westminster between the Parties?

One thing is certain. Sterling has been sold off aggressively overnight. Will the move lower continue in the coming weeks? We have been Sterling negative for a while and can only see downside risk over the summer months.

You can view the overnight moves on Sterling/Dollar and Sterling/Euro on the graphs below –

GBP/USD GRAPH

GBP/USD GRAPH

GBP/EUR GRAPH

GBP/EUR GRAPH

Once the dust settles today we will have a detailed report over to you on Monday.

If you have any currency requirements please get in touch to discuss a strategy for the coming months.

Have a great weekend

Kind Regards,

Liam Alexander

ACM Update 5 June 2017

Election week. We’re into the final furlong. Will there be a shock on the cards for a late rally by someone (Jeremy Corbyn) to snatch victory like Wings of Eagles did at the Epsom Derby on Saturday? If not, will Theresa May deliver the landslide victory many have predicted?

This week we expect some sizeable movements for Sterling. Will the movements be as severe as leading up to the referendum vote? Probably not. However, the lack of certainty around this election will cause some sharp movements. We had some positive data out of the UK last week from the Construction industry with the PMI (Purchasing Managers Index) jumping from 53.1 to 56.0 in May. Does this mean the UK is starting to weather the storm post Brexit or a blip in the readings?

We are Sterling negative short-term. The shocking events over the weekend in London coupled with the horrendous events in Manchester a few weeks ago has heightened tensions in the UK. The outcome of the General election this week is going to be the main driver for Sterling short-term. Should we see a landslide victory for the Conservatives then expect this to be Sterling positive. We should see a spike higher on the news. Has this been largely priced in already? I think there is a little more room in the move now after Theresa May’s somewhat disappointing campaign. However, should the Conservatives win by anything less than a predicted landslide then this will be Sterling neutral at best. Should the unforeseen happen and Labour wins the election then expect Sterling to be sold off aggressively.

Market orders  

Should you have any immediate or upcoming Sterling exposure then consider utilising market orders. Why? Market orders give you access to the 24 hour market. We are likely to see some large movements during Thursday and into Friday morning. By placing market orders with the Trading Department you can look to achieve the best possible price at the best possible time. We will discuss appropriate levels to aim for and then place these orders in the market for you to automatically execute at on a GTC (Good till cancelled) basis. Should you have any questions on Market orders please contact me directly.

Sterling/Euro

Sterling/Euro this week is likely to be under pressure. You can view the movements last week on the graph below –

Sterling/Euro

As you can see, we have been up and down on an intraday basis although with a bias to the downside. I expect us to challenge the lower 1.13’s this week. We had positive data out of the Eurozone last week. German exports showed rapid growth driving the Factory PMI reading higher from 56.7 to 57.0 in April. Will the Euro continue along its stronger path? I expect the Eurozone GDP reading on Wednesday to print a strong figure. In addition, we have the ECB interest rate decision and press conference on Thursday. Interest rates will remain the same although should Mario Draghi, the ECB president, shake off the dovish noises and go on the front foot with more hawkish language then expect this to boost the Euro further.

Indeed, we have had Services PMI data released from the Eurozone and the UK this morning. The Eurozone data printed 56.3 against expectations of 56.2. The UK services PMI came in below expectations at 53.8 against a consensus estimate of 55.0. I expect this to be a general trend in the coming months. In addition to this EUR/USD broke through 1.12 the figure and has now found some support above this level. The Euro is looking to climb higher and any further upside on EUR/USD will likely drag Sterling/Euro lower.

We have inflation data out of the UK on Friday with the release of Consumer Inflation expectations. We expect inflation to edge slightly higher putting further pressure on UK households over the coming months. This is likely to prove Sterling negative.

If you have a requirement to convert GBP into USD or Euro please do consider locking in some at current levels. Yes, you’re probably not jumping for joy at present on current rates although once Brexit negotiations start in earnest a week or so after the general election then we may see Sterling fall further.

Please contact the Trading department for current SPOT rates.

Sterling/Dollar

You can view movements on Cable (GBP/USD) last week on the graph below –

Cable (GBP/USD)

The Dollar has been under some pressure in recent trade with the ‘Trump rally’ all but a distant memory. The NFP (Non-Farm payroll) figure came in at 138K in May. This fell well short of estimates of a rise of a 185K. The upside on Friday for the US was that unemployment fell to a 16 year low. The unemployment rate fell from 4.4% to 4.3%. This should give further weight to an expected interest rate rise in the US in June.

Will the US Dollar continue to show signs of weakness? I expect it to continue to be under pressure against the majority of G10 counterparts short-term. With President Trump dancing to his own tune there is likely to be sharp movements for the US Dollar in addition to equities and oil prices. Oil prices dropped last week with President Trump deciding to exit the Paris Climate deal for example.

If you have a requirement to purchase USD from Euro consider taking advantage of the recent upside. In addition, if you have a requirement to purchase USD from Sterling consider locking in a large amount of your exposure on a SPOT basis prior to Thursday and the UK election. This will take the main risk event off the table for you this week.

If you have any questions this week I would urge you to call a member of the Aston team to discuss your individual requirements in greater detail than normal. We can then structure a strategy that will help protect you whilst taking advantage of any moves in your favour this week.

Have a fantastic week.

Written by Liam Alexander

ACM Update 22nd may 2017

Another rollercoaster week for Sterling coming up? It was sold off overnight on the opening in Asian markets due to the UK intimating a tough stance on any divorce payment with a threat to quit talks. The market took a bearish outlook and Cable (Sterling/Dollar) dropped from the 1.3040 handle through 1.30 the figure. Chances of the talks being a convivial affair? About as great as me becoming a Vegan and wearing double denim. 

Sterling had a strong performance last week largely due to Retail Sales coming in significantly above expectations. UK Retail Sales were up 2% (QoQ) and 4.5% (YoY) beating forecasts by 1% and 2.6% respectively. Couple this with the sell-off in the US Dollar due to ongoing political woes, allegations and general calamity this has resulted in Cable (Sterling/Dollar) pushing through 1.30. The move has lasted as long as an ice cream in the sun. 

You can view price movements on Sterling/Dollar on the graph below – 

GBP/USD 1 Week

Sterling/Dollar

Up or down for Sterling/Dollar? It is easier predicting the British weather. You have investors putting crash helmets on in case President Trump can’t push through Fiscal Stimulus in the US. Does President Trump want a weaker US Dollar? Will the Federal Reserve on Wednesday give us further insight into a potential rate rise in the US in June? There are a multitude of variables that will drive markets this year. If statements are hawkish then this may give the Dollar a shot in the arm and boost its short-term direction. However, should the language veer on the bearish side then expect the US Dollar to be sold off later this week. 

Have you utilised market orders with Aston? If you hold US Dollars and need to purchase Sterling you can look at last night as an example. Price movements are more and more severe on opening. If you have an order in the market then you can take advantage of the 24 hour market rather than through UK market hours. Please get in contact with the trading department and they can walk you through the process. Alternatively, feel free to contact me directly. 

If we look at the Sterling angle then wage growth has stagnated to a pace where we’re now looking at reversing further. Add this to inflation creeping higher with estimates of just under 3% year end then Mr and Mrs Joe Bloggs will have less money in their pocket. Retail Sales last week were expected to disappoint to the downside although as detailed above they came in remarkably stronger. Looks like Mr and Mrs Bloggs are still spending away. Is it on credit? Are last week’s figures a blip? I would expect Retail Sales to disappoint by and large for the rest of 2017.  This will weigh on Sterling. We also have the small matter of bullish talk from the politicians on Brexit negotiations. They have come out scrapping that’s for sure. Will this prove to be the best strategy or is a more accommodative approach required? We will have clarity on that soon enough.

I expect Sterling to struggle over the summer months. The Conservatives will win the election, barring a complete capitulation. Will this give Sterling a short-term spike? Potentially, although I expect the move to be reversed almost immediately. Risks are skewed to the downside for Sterling and the UK over the coming months. If you have a requirement to convert Sterling into US Dollars then do consider covering off some of your exposure on a SPOT basis at current levels after the recent move higher. 

If you are selling USD back to Sterling consider placing market orders at 1.2950 and then stagger them at 50 pip intervals. Feel free to get in contact to implement these. 

Sterling/Euro

As suggested earlier this month we expected GBP/EUR to move lower as has been the case. This is largely down to an ever improving performance of the single currency. Indeed, the EUR/USD move that has pushed through 1.12 the figure this month has weighed on Sterling/Euro. On a monthly basis we hovered around the 1.20 figure for a brief period although since then we’ve moved lower. We have broken through the 1.16 level that now opens the door to a move below the psychological level of 1.15. 

If you have a requirement to purchase Euro’s from Sterling then do consider locking in some at current levels to offset some of your risk. With a General Election coming up in a matter of weeks and negotiations with the EU starting in earnest a week or so after then there is going to be a lot of volatility. Eurozone data, with the exception of our Greek friends, is improving. I expect a strong stance from our European cousins at the outset of negotiations. This is likely to put Sterling on the backfoot. 

If you have a requirement to purchase Euro’s from GBP then lock in a portion on SPOT at current levels. We might drift lower if EUR/USD continues its move higher. If you think we may see some upside for Sterling and a weakening of the Euro then consider placing in some near-term market orders. Please contact the trading department to discuss appropriate and achievable levels to aim for. 

You can view the downtrend on Sterling/Euro last week on the graph below – 

GBP/EUR 1 Week

INSERT GBP/EUR GRAPH

This week is relatively data light. We have inflation report hearings out of the UK tomorrow, FOMC (Federal Open Market Committee) minutes out of the US on Wednesday, UK GDP (preliminary) (QoQ) and (YoY) figures out of the UK on Thursday and Durable Goods orders out of the US on Friday rounding off the week. 

The next few weeks will see significant moves on currency markets. Please make sure you have a strategy in place if you have ongoing or upcoming requirements and feel free to get in contact with a member of the team at Aston. 

Have a fantastic week. 

Written by Liam Alexander

ACM Update 16th May 2017

The world looks on incredulously as Kim Jong Un launches another missile test, the recently inaugurated President of France takes post and selects Edouard Philippe as his Prime Minister and Theresa May dropped two points in election polls because for some utterly inexplicable reason she chose to bring up the possibility of removing the ban on fox hunting. No matter your enthusiasm or lack of it, I am as baffled as Sean Spicer after Trump tells now former FBI Chief Comey, “You’re fired!”, on why it needed to be discussed right now. Sadly, I cannot hide in the bushes even if I WannaCry, just like many of the IT crowd. Hold onto your hats folks… even by last week’s standards, this week could be a wild ride!

GBP/EUR

The Times has reported European firms already turning their backs on British suppliers. Almost 50% of Eurozone businesses with British suppliers are already trying to find replacements elsewhere within the EU. After surveying more than 2,000 supply chain managers, the Chartered Institute of Procurement and Supply reported that the "separation from Europe is already well under way". Around 28% of firms said they intend to source all of their supply chain from within the remaining EU.

There are also risk heavy times ahead for GBP value as we continue to enjoy relative stability at current levels, for another couple of weeks before we lose momentum. The realisation that an increase of real inflation against a much lower, flatter wage increase means that, ultimately, in the UK we are all going to have less to spend on things that are becoming increasingly expensive. Earnings growth for Q1, out on Wednesday, is expected to have slowed to 2.2% excluding bonuses. A further rise in CPI, combined with the slowing wage growth, will add to the negative impact on real wages. We could see GBP softer this week as a result but it’s important to note that losses may be limited as political developments remains the main mover for now. Downside resistance stands at around 1.1735 against the Euro. 

Anyone selling GBP may wish to seriously consider fixing forward rates now, in anticipation of the decrease in value due in the relatively near future. Please contact us to discuss this as soon as you can because time may well be running out for you.

The following graph depicts last week’s GBP/EUR moves:

GBP/EUR 1 Week

GBP/USD

Cable lost almost 100 points last week, as the pair closed at 1.2877. The Bank of England held interest rates at 0.25% but the pessimistic rate statement sent the GBP lower. In the US, President Trump’s firing of FBI Director James Comey set off a political meltdown. The controversial move worried markets that the Administration may have to delay plans for fiscal spending and tax reform. USD lost ground on the news but recovered quickly. On the fundamental side, US CPI and retail sales disappointed and missed the forecasts.

Downside resistance stands at around 1.2760 against the Dollar now. This week’s key events are UK CPI and Retail Sales and Average Earnings Index all on Tuesday 16th May. The BoE is forecasting a lower standard of living for Britons due to Brexit, and weaker data could send the pound lower. The US economy remains solid, and the Fed is expected to raise rates two more times in 2017, although there is some doubt now about a June hike.

Once again, Cable is tough to call now but if you are selling USD back to GBP we suggest it may be worthwhile covering off the risk with a sizeable portion on a SPOT basis. Please contact me for a rate of exchange, as we keep saying, doing nothing is speculating.

The following graph depicts last week’s GBP/USD moves:

GBP/USD 1 Week

EUR/USD

Germany’s high trade surplus means that money is flowing into the euro area and German GDP met expectations and reached 0.6%, a robust level. The trade balance will be announced on Tuesday. Back in February, trade stood at 19.2 billion. A similar figure is on the cards now at 18.8 billion. When there is no excessive speculation, this influx pushes the common currency higher. USD previously enjoyed hopes for fiscal stimulus from the Trump administration and the upbeat sentiment from the Federal Reserve also underpinned that. Both have changed with Trump’s failure to pass any health-care reform and the “dovish hike” from the Fed. So, fewer people now expect EUR/USD parity, including the team here at Aston.

The following graph depicts last week’s EUR/USD moves:

EUR/USD 1 Week

It only remains for us to wish you well for the coming week and to remind you that no one has a crystal ball. Anyone that tells you they can predict the future with any degree of absolute certainty is lying. However, some can offer you educated opinion and attempt to provide some thoughtful, common sense guidance. Not trading your currency is as much of a risk and a gamble as trading. The markets will move, volatility and relative values will vary but whatever your foreign currency exchange and international payment needs are, you can rely on the team here at Aston Currency. Please do not hesitate to get in touch with us, we look forward to hearing from you.

Written by Damien Lipman

 

ACM Update Monday 8th May 2017

Tres bon Macron! As we woke up this morning the world cried “Holy Macron-i!” as Emmanuel Macon’s victory took more than 66% of the vote in France’s Presidential election and has halted the now officially Sub-Marine-d Le Pen and the marche of radical populism, at least for now. The Euro strengthened then dropped off after early profit taking in the Asia market this morning and confidence in polling has returned for some. It is important to remember that despite winning by the second-largest margin since 1965, one in three voters preferred Le Pen's anti-European, anti-immigrant nationalism so Macron still has his work cut out for him. Of course, in France as I type this the trade unions and activists are already protesting. A record 11.5 percent of votes cast were either blank or spoiled, while a near-record total of 25.38 percent of the registered voters abstained the official figures showed, all of which gives the gallic shrug a slightly more pointed meaning.

GBP/EUR

The results of the election in France have relieved much of the tension in Europe on the political integrity of the EU, if not the financial, at least until the election in Germany in  September. Despite the Macron-economic effect overall GBP has been steadily gaining ground over the Euro and they sit at 1.184 as I write this. Don’t forget that in mid-March the market bottomed out at below 1.14. If you are considering buying Euro from GBP now may be an appropriate time to trade at spot or fix a forward contract to take advantage of the rate before the UK election and then the real effects of the Brexit negotiations hit home. Please do not hesitate to contact one of the team here at ACM to discuss your needs.

The following graph depicts last week’s GBP/EUR moves:

GBP/EUR 1 Week

GBP/USD

The US had two large pieces of news with Non Farm Payrolls strong at +211k and with the unemployment rate falling unexpectedly to 4.4%, it is good news for the Trump administration. There will be another set of jobs reports in June before the next probable Fed move on interest rates of c.0.25%. Tax reform is going to take longer than anticipated to work through and that will generate uncertainty. There is also something to be said for no matter how good or bad you think the NHS is, its very existence must be preferable to staring down the barrel of Trumpcare for the millions of Americans that it is unlikely to permit cover over.

In the UK an element of Prime Minister May’s mantra rubbed off on GBP which remained “strong and stable” for much of the week and sits comfortably around 1.296 mark today, following a steady climb. Do not ever take anything for granted, despite the election being believed to be “in the bag” for the Conservatives come June. This is a view supported by the shifting sands of recent local elections. GBP may not continue to enjoy the relative strength it holds today. The future for the UK is fraught with Brexit brinksmanship and some hard negotiations ahead. Linked with weakening fundamentals and GDP growth slowing down all of this is likely to result in a drop of GBP value. Buyer beware! Please consider defining your trading triggers and please contact us to discuss a market order so that we can help you achieve your aim.

The UK will reach another interest rate decision point on “Super Thursday” this week. Dubbed “Super” as the Bank of England will also publish its quarterly inflation report. Usually this is an opportunity to lay out new monetary policy announcements but now with weaker growth and slowing wages, the BOE may be more cautious. Inflationary pressures have been alleviated but Mark Carney and his colleagues might also be more cautious on communications as the event is held exactly four weeks ahead of the general elections in the UK.

The following graph depicts last week’s GBP/USD moves:

GBP/USD 1 Week

EUR/USD

Just coming off its highest point in 5 months (now at c.1.098) the EUR/USD rate briefly broke through 1.10 over the weekend. Now that the Euro hedged positions have been closed post French election, and with business confidence improving beyond just Germany from today, there is likely to be some period of stability for the Euro, less a black swan event. USD on the other hand is not yet anywhere near steady ground or even shallow waters. This week Friday is likely to bring the seismic shock, if any is to come, as US CPI and advance retail sales are published, along with the German GDP announcement.

The following graph depicts last week’s EUR/USD moves:

EUR/USD 1 Week

It only remains for us to wish you well for the coming week and to remind you that no one has a crystal ball. Anyone that tells you they can predict the future with any degree of certainty is lying. However, some can offer you educated opinion and attempt to provide some thoughtful, common sense guidance. Not trading your currency requirements is as much of a risk and a gamble as trading. The markets will move, volatility will vary but whatever your foreign currency exchange and international payment requirements are, you can rely on the team here at Aston Currency.

Written by Damien Lipman

ACM Update 02 May 2017

Sterling staged a comeback last week and is now off the ropes with short positions slowly being unwound. Will Sterling be able to keep the positive tone and deliver a stoppage to the US Dollar akin to Anthony Joshua versus Klitschko? How will GBP fare against the resurgent Euro? What is for sure is that Brexit negotiations look set to be as bloody as the world heavyweight fight over the weekend.

Sterling/Dollar is currently flirting with 1.29 the figure. A softer US Dollar has aided the move. Will we break through the psychological level of 1.30 in upcoming trade? There are a number of central bank meetings this week alongside data that will give us an indication on direction.

You can view the moves last week on Cable (Sterling/Dollar) below –

GBP/USD 1 Week

Data out of the UK is likely in the coming months to prove as mixed up as a ‘flexitarian’. UK Manufacturing PMI data out this morning surprised to the upside printing a three year high of 57.3 against consensus expectations of 54.0. A weak sterling has helped manufacturers sell more to the Eurozone. We’re back above the 1.29 handle on the back of the release. This is likely to be a short-term bounce. If you have a requirement to purchase USD from Sterling do consider covering off some on a SPOT basis to take advantage of the recent move higher and lock in gains. Do also consider placing market orders at 1.30 the figure should we see a further move to the upside. Please contact the trading department for a rate of exchange and to implement orders.

We have the Federal Reserve meeting on Wednesday this week. No rate rises are expected although the language from the FOMC (Federal Open Market Committee) will be keenly watched to see if a June rate hike is on the cards. Should we hear any hints then this may be dollar supportive short-term.

In addition, we have the NFP (Non-Farm Payroll) figure released on Friday. We had a poor figure out in April (98K) and I expect a stronger and closer number printed in line with consensus estimates of around 180K for May.

If you are selling USD back to Sterling I do think we are going to see some weakness in GBP. We expect consumer spending to slow further throughout this year. Earnings growth is likely to fall further with inflation ticking up with negative real wage growth kicking in. Household spending will likely contract. I expect Sterling to struggle to post heavy gains this year with risks to the downside. One small upside in things is the news that avocados are likely to double in price. That’ll hopefully stop millennials and hipsters posting pictures of avocados everywhere.  

Sterling/Euro

You can view the price movements on GBP/EUR on the graph below –

GBP/EUR 1 Week

The EUR is likely to post further gains this year against the US Dollar that should in turn move Sterling/Euro lower. We expect GBP/EUR to trade in a range this year of 1.15-1.25 with not too much movement either side of this. Sterling/Euro will be largely driven by ongoing political uncertainty and the outcome of ‘Brexit’ negotiations. The UK Prime Minister, Theresa May, has strengthened her hand by calling a General Election. I will eat my hat if the Conservatives don’t win the election with a large majority. This has removed some uncertainty. However, if various reports are to be believed then the UK and the EU are galaxies apart in their thinking on the talks process. Can these chasms be closed or could we potentially have no deal in place on our exit from the EU?

The Euro has been boosted from the French elections and the likely outcome of the result being in line with the polls. Evidently pollsters have got more wrong than right recently although we expect a Macron victory. This removes any ‘Frexit’ risk. The ECB meeting last week was slightly more dovish in tone than expected although I except a more hawkish tone over the coming months from Mario Draghi, the ECB president. We had manufacturing data out of the Eurozone this morning that came in at six year highs printing 56.7.

I expect a slow but steady improvement for the Eurozone this year that should firm up the Euro. We have growth figures out of the Eurozone on Wednesday with preliminary GDP readings expected to print 0.5% for Q1’ 17. I expect the EUR/USD pair to move higher.

You can view the EUR/USD movements over the last week on the graph below –

EUR/USD 1 Week

The next hurdle will be the 1.10 figure. Should we break through that and see a sustained settlement above here then this will open us up for further moves higher on an intraday basis.

If you have a requirement to purchase Euro’s from Sterling and can achieve above 1.18 in the coming weeks I would suggest this is a good level to lock in at. Please contact the trading department for a rate of exchange. If you are selling Euro’s back to GBP then our suggestion would be to implement market orders at 1.1750 and lower to take advantage of any Sterling weakness.

Moves will continue to be exaggerated with the political and economic landscape changing on an almost daily basis.

Please make sure you have a plan in place and a strategy so you avoid being on the wrong side of any sharp movements. Feel free to call me directly for a conversation or speak with the trading department to cover off some of your exposure.

If you have any questions please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update 24 April 2017

The first round of French elections were up this weekend. Like a London Marathon runner carrying a fridge and approaching the finish line, the European Union breathes a sigh of relief.

European equities were up across the board. The Euro rallied in the Asian session jumping 2% against the US Dollar. You can view the movement on EUR/USD on the graph below.

EUR/USD 1 week

EUR/USD 1 week

This in turn pushed GBP/EUR south. We can wave goodbye to 1.20 the figure for the time being. Why did the Euro spike higher on the results? The Centrist candidate, Emmanuel Macron, and the Far right candidate Marine Le Pen, brought down the established parties and candidates and surged through to the second round. However, it seems that Emmanuel Macron will have an unsurmountable distribution of the votes so it would suggest that he will be the next French President come early May. Cue a dumping of safe haven assets like Gold and Yen and a move back to a ‘risk on’ environment.

The polls have been wrong a number of times recently. However, it would be a colossal miscalculation if Macron didn’t win. We can thus say goodbye to the awful term of a ‘Frexit’.

What does this mean for GBP/EUR? I think we can now expect a downtrend to resume. There is a relief rally going on with the single currency at present and this may fade pushing Sterling/Euro higher in the short-term. However, I expect towards the end of Q2 for us to be targeting 1.15 on GBP/EUR. Why? The Eurozone is continuing to improve. Take the PMI readings last week for example. Add to this the easing of political risk across the EU. We have the ECB meeting this week where we will learn more from Mario Draghi, the ECB president. Will he cut back on stimulus? Will he implement this in June post the expected unveiling of Macron in May? We will know more from his policy announcements on Thursday.

Markets will largely be focused again on the Eurozone for the time being. If you have a EUR requirement this week please get in touch with a member of the trading department to discuss a strategy to mitigate some of your short-term risk to EUR moves.

You can view the volatility on Sterling/Euro from last Monday to this morning below –

GBP/EUR 1 Week

GBP/EUR 1 Week

Elections seem to be in vogue at present. We haven’t had enough recently it seems. Before the French elections we had Theresa May, the UK Prime Minister, announcing a snap general election on Tuesday. That blew the cobwebs off dear old Sterling and sent it spiralling higher. Has May done the right thing by calling a General election? Probably. It will undoubtedly strengthen her hand in negotiations with the EU. Will she win the election? If she doesn’t, we may as well turn off the lights. The markets backed May’s decision hence the movement higher in GBP. Will this continue? As stated earlier I expect a downtrend in Sterling to surface once we have to jump into the raft and navigate rocks and dangerous waters akin to white water rafting during negotiations. The UK economy has punched above its weight since the referendum result. Will Q3 prove the quarter when perhaps a slightly more realistic picture is painted of what is down the line for UK PLC? Retail Sales last week posted the biggest fall in seven years. Inflation is creeping up and is likely to hit 3% early next year if not the end of 2017. Prices are going to continue to rise for the consumer and with slowing real wages consumers are tightening their belts. Consumer confidence is falling. The UK will also need to address its Fiscal position at some point although we’ll kick that down the road for now whilst we focus on the General Election.

If you have a Sterling exposure please do get in touch.. Markets are driven by mainly political rather than economic fundamentals at present. We are seeing moves of between 1-2% on an intraday basis. Please make sure you have a plan in place to mitigate your ongoing risk whilst currency volatility continues.

 

Sterling/US Dollar

It would be rather remiss of me to forget to mention our cousins across the pond and the US Dollar. Market focus is currently on the Eurozone although there are a few important developments and announcements out of the US. We have durable Goods orders out on Thursday with preliminary GDP (Q1) figures released on Friday. We also have the small matter of spending authorisation going on with US Congress with the potential for a Government shut down this week. That would be some first 100 days in office for the man with the blonde hair.

I expect the US Dollar to resume some strength after a bit of kicking from Sterling and Euro over the past week or so. You can view the movements on Sterling/Dollar from last Monday to this morning below –

GBP/USD 1 week

GBP/USD 1 week

If you hold US Dollars and are looking to convert into Sterling please do consider staggering marker orders to take advantage of any moves in your favour in the coming weeks. I would expect Sterling/Dollar to drift lower short-term. If you need to purchase USD it may be prudent to take advantage of the shift higher in the past week and lock in some of your USD on a SPOT basis. Feel free to contact the Trading Department or myself directly for a rate of exchange.

Well, the past week was a quiet one. Expect more volatility and unexpected movements in the coming weeks and months ahead. Please make sure you have a strategy in place to protect yourself against adverse movements.

If you have any questions whatsoever please do let me know.

 

Have a fantastic week.

Written by Liam Alexander

ACM Update 18 April 2017

Politics continue to dominate. Attention is shifting to the upcoming French elections. After ‘Brexit’ and the US elections I think it is safe to say no-one is going to read too much into the polls. We also have the small matter of the man with the funny haircut and the threat of Nuclear war. Take your pick between the chap in Pyongyang or Washington. 

Sterling has been on an upward trajectory. As suggested last week we thought Sterling/Euro would have a slight move higher and so it turned out. We broke through the 1.18 resistance level this morning although this has proven to be short-lived. We had a sell-off in Sterling this morning on the back of an announcement that Theresa May is due to issue a statement. We had a fall in the FTSE by around 1%. Will Sterling recover and post gains against the single currency? Perhaps. They will be modest gains however. A move higher will be largely dependent on EUR weakness from the first round of the French elections on Sunday. There will be some uncertainty and this should weaken the Euro short-term. I would expect the Euro to recover once we have pushed the first round of voting out the way and we have some clarity on things. 

After the moves higher in Sterling I expect some downward pressure to come towards the end of April. Like someone gorging on Easter eggs, the initial high is soon outweighed by a feeling of sluggishness. Consumer spending in the UK is much the same. We have Retail Sales out of the UK on Friday this week that will be keenly watched. There is likely to be a drop off in the numbers so that may weigh on the Pound. If you have a requirement to purchase Euro’s from GBP please do consider locking in some on a SPOT basis this week prior to Friday. Please contact the Trading Department for a rate of exchange. 

You may also want to implement a market order over the weekend to purchase Euro’s from GBP in light of the French elections. There may be a sell-off in the single currency so try and take advantage of the move in the Asian session on Sunday evening/Monday morning. Please contact the trading team to implement an order. 

You can view the upside movements in Sterling/Euro last week on the graph below. 

GBP/EUR 1 Week

If you have a requirement to convert Euro’s into Sterling then consider staggering market orders to the downside. Whilst there may be a short-term weakness to the Euro I expect Sterling/Euro to head back down towards the 1.15 level. The Eurozone is largely coming back to life. Eurozone confidence is on the up and is forecast to come in at a two year high. We have a number of inflation releases this week from the Eurozone largely in the form of CPI (Consumer Price Index). The Eurozone should maintain the momentum from Q1 into Q2. 

Sterling/Dollar

Sterling/Dollar is showing signs of movement again. We broke through 1.26 the figure this morning and then retreated to levels around 1.2520 on the back of the UK announcing a statement from the PM, Theresa May. The Dollar will move this week on the back of a number of Tier 2 data releases in the form of Industrial Production, Housing Starts, Fed Beige Book, Existing Home Sales and a couple of FOMC (Federal Open Market Committee) speakers.

Sterling/Dollar is likely to prove volatile this week.

You can view the movements last week on GBP/USD on the graph below – 

GBP/USD 1 Week

UK ANNOUNCEMENT

Theresa May, the UK Prime Minister announces early UK General Election

The rollercoaster ride continues. The UK election will be held on Thursday 8th June. Will this aid or drag on Sterling? We had an initial bounce. We will know more later this week on how the markets will take this announcement. 

Well, to round off this week’s report my statement of ‘doing nothing is speculating’ couldn’t be more apt. There are so many variables in the current climate. Please do get in contact with your point of contact at Aston to put a plan in place to mitigate your currency risk over the next few months. 

Any questions, and I’m sure there will be many, please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update 11 April 2017

Sterling is showing renewed strength for a second trading session in a row. Is the US Dollar coming back into vogue? Will the EUR continue to weaken? Picking the winner at The Grand National is easier to predict.

EUR/USD has been on the slide and is currently playing around 1.06 the figure. We have retreated from highs of just over 1.09 last month. Will we be targeting the 1.05 figure in upcoming trade? Is this going to translate to a move higher in GBP/EUR? If you have a requirement to purchase EUR from GBP it may be prudent to take advantage of the recent upside and lock in a percentage of your exposure on a SPOT transaction. Please contact a member of the trading department for a rate of exchange. There may be some further room to move higher so consider placing a market order around 1.1750. I don’t expect any sustained move above 1.20 short-term so if you have requirements this week do consider locking in now. 

You can view the movements on GBP/EUR from last week to this morning on the graph below – 

After we heard Mario Draghi’s dulcet tones last week the EUR went tumbling like an Easter egg rolling down a hill. Interest rates look set to remain on hold for the time being. What will the French elections do to the single currency? It’ll provide some volatility although I think it’ll end up being a non-event. The single currency will likely remain under some pressure for the remainder of April and into May. If you need to convert EUR back to GBP consider doing a small portion on a SPOT basis for the time being. There will inevitably be dips on an intraday basis although I do expect the trend to nudge higher so contact a member of the trading department to discuss implementing a strategy.  

Sterling/US Dollar

What now for Cable? (Sterling/US Dollar). This week price movements have been as dull as a storyline in the soap EastEnders. We had the Federal Reserve get together last week where nothing revelatory was shared. The stock market is probably overvalued at present and there’ll be a paring back of the balance sheet debt which is somewhere north of 4 Trillion. We didn’t receive any further clarity on the time of expected interest rate hikes so we should gain further insights later in Q2. We  had the NFP (Non-Farm payroll) figure released on Friday which disappointed to the downside. Expectations were for a figure of 180K and we got a print of 98K new jobs added for March. The labour market remains in fine fettle despite the disappointing number and I’d expect it to edge higher in April. The US unemployment rate also fell to a 2007 low.

You can view the moves on Sterling/US Dollar on the graph below – 

There are calls from various analysts for Sterling/US Dollar to trade anywhere this year from 1.05 to 1.40. Where will we end up? There are so many variables both politically and economically it is almost futile guessing. But estimate I will. I don’t expect us to be too different from where we are now at the end of 2017. We will be somewhere between 1.20 and 1.30 as a range. I expect the US Dollar to win the ugly parade again this year of the currencies. Sterling will largely be politically driven this year on Brexit negotiations. We had inflation data out of the UK this morning in the form CPI (Consumer Prices Index) that came in on expectation at 2.3%. Inflation has been picking up over the past few months partly due to a drop in Sterling that has hiked up import costs. We’re above the Bank of England target rate of 2% and I’d expect us to remain so for the remainder of 2017 and into 2018.

If you a USD seller back to Sterling I would consider locking in some of your exposure at current prices. Anything under 1.25 is good value. Please contact the trading department for a rate of exchange. I would also eye 1.24 the figure with a market order if you have a few weeks to play with. If you’re a USD buyer then cover off some of your exposure on a SPOT basis. As I always say, doing nothing is speculating. 

This week we have a few releases although not as hectic as last week. We have data out of the UK tomorrow in the form of the unemployment rate, average earnings and the Claimant Count change and rate. Out of the US on Thursday and Friday we have inflation data and Retail Sales rounding off the week. 

If you have any questions please do get in touch. It is chocolate eating time from Friday onwards for Easter so if you have any currency movements to make please get in touch by Thursday. 

Have a great week.

Written by Liam Alexander

ACM Update - 04 April 2017

Unless you have been living in a cave Article 50 has been triggered. Brexit is underway. Sterling fell on the announcement, then rallied. Much as it does most days. All the moves had been priced in. Slight anti-climax for markets? Perhaps. I would opt for a feeling of relief. For now.

Theresa May, the UK Prime Minister, has opted for a strong stance and bullish language in the run up to triggering Article 50. She has had no other option as she has had to make the right noises. However, I feel now that the letter has been sent to Mr Tusk we will see a slight softening in her approach and language to try and achieve a ‘soft/hard Brexit’. Hopefully the awful phrase ‘Brexit means Brexit’ is consigned to history now. The negotiations will start in earnest next month. At present the fighters are in the changing rooms limbering up. Once the music starts playing at the end of April at the EU summit we’ll have a better idea of the shape the fighters are in. Once the bell rings for Round 1 next month we’ll see who lands the early blows or if it is a case of sizing each other up.

As mentioned above Sterling fell on the triggering of Article 50 and has then proceeded to jump higher than a kangaroo on a trampoline. There seems to be some life in dear old Sterling.

You can view the moves on GBP/EUR last week on the graph below –

GBP/EUR

Where is Sterling going against the EUR? Are we due to target 1.15 the figure? Or is Sterling feeling revitalised with Spring in the air and is a push to the upside and 1.20 the figure realistic? Sterling has some weight behind it for the moment. I would expect some incremental moves higher with 1.18-1.19 looking toppish for the month ahead. If you have a requirement to purchase Euro’s this month please contact myself or the trading team for a SPOT price. I would also suggest considering implementing some market orders on the basis that we may see some further moves higher. Please contact the trading team to discuss appropriate levels to aim for.

From May onwards GBP may be under pressure so do also consider locking in some Euro’s this month on a Forward Contract. It takes risk off the table for the next 3/6 months whilst we ride out the initial phase of negotiations. You know what my favourite phrase is – “Doing nothing is speculating”. Please do consider at least covering off a portion of your exposure so you have a percentage of your exposure protected against any downside moves. If you would like a rate of exchange please contact our Trading Department.

We have the French elections this year and whilst I don’t think we’ll have any shock wins, although everyone said that about Trump and the UK referendum, this will add to volatility for the single currency. Theresa May also has a domestic battle on her hands with the Scottish Government requesting another referendum. The country needs that like a hole in the head at present.

Politics is going to continue to dominate for the foreseeable future. This opens up larger short-term moves on announcements that can quite quickly change the direction of a trend. Please make sure you are suitably protected.

Sterling/Dollar?

The majority of the markets focus has been on the UK and the Eurozone for the past couple of weeks although with President Trump being well, President Trump, he and the US won’t be out the news for long. Indeed, this week we have the FOMC meeting on Wednesday and should this be slightly dovish we can expect some Dollar weakness. Has the call for Cable (Sterling/US Dollar) to target under 1.15 retreated for good now? Potentially. I would expect some short-term upside on Sterling/Dollar with a move above 1.25 likely. If you have a requirement to purchase US Dollars it may be an idea to implement market orders at 1.25 the figure. Please contact myself or the Trading Department to implement a market order.

You can view the movements last week on GBP/USD below –

GBP/USD

It is a fairly quiet week on the data front with the main release coming from the US on Friday with the NFP (Non-Farm Payroll) figure out. Expectations are for a figure of 180K+ jobs for March printed. Should we see a figure under this then this should provide further weakness for the Dollar that will shift us back above 1.25.

On the flip side, should we see a healthy figure then this could translate to a bout of Dollar Strength and with Sterling likely to prove erratic for the near term then it really is a case of protecting yourself by executing your exposure and having a plan in place to mitigate your currency risk.

If you have any questions please do not hesitate to get in touch.

Have a fantastic week

Written by Liam Alexander

Aston Currency Management – FDI Award Winners

FDI Best Forex Broker 2017

Aston Currency Management are honoured to announce that we are the proud winners of the FDI Best Forex Broker 2017. The award is testament to the high level of service that we offer all our clients and our hardworking team. We would like to thank all our customers for their support.

James Bennett, Senior Partner of Aston Currency Management receives the award on behalf of the Aston team

James Bennett, Senior Partner of Aston Currency Management receives the award on behalf of the Aston team

The UK’s inaugural Foreign Direct Investment Awards (the FDI Awards) took place in London on Wednesday night. The award is intended to recognise a company that has delivered outstanding service to their clients. It also recognises that the agency ensures their service offers an efficient management of foreign and direct investment.

We pride ourselves on offering the highest level of customer service and we are transparent with our costs. Aston Currency Management provides deliverable foreign exchange and international payment services and we work hard to understand our clients and add value to their business.

For more information, visit: http://www.fdiawards.com/

ACM Update - 20 March 2017

I am not going to mention too much about the Six Nations result but it is probably never wise to expect a win against the Irish on St Patrick’s weekend, despite St Patrick being a migrant Welshman. Theresa May has fixed the date to trigger the Brexit process next Wednesday, 29th March. The PM will be officially notifying the EU by writing a “Dear John,” to each of the other 27 member states, after which the divorce proceedings / negotiations can begin. Elizabeth Edwards (author of “Resilience”) gives the memorable line, “She stood in the storm, and when the wind did not blow her way, she adjusted her sails.” Whilst The PM and her Cabinet will be doing all they can to keep a steady hand on the tiller for HMS United Kingdom, Nicola Sturgeon remains cranky in more ways than one. As one of the largest potential threats to cause uncertainty for GBP value, Sturgeon’s bid for a second referendum on Scottish Independence will need to gain momentum to have a dramatic effect. Sterling had opened this week over 1% higher but has quickly lost ground over the course of today.

GBP/USD

This is on the back of a weekend of G20 meetings where Reuters quotes Kenneth Broux, Head of Corporate Research, FX and Rates at Soc Gen, who said "This G20 is not really a big deal for the market, partly because the language on FX was maintained. The disagreement on trade and protectionism is new, but the meeting at a later date between U.S. President Donald Trump and Chinese premier Li could be more pertinent to where trade negotiations are headed," What is clear is the resistance of the other 19 member states of the G20 to Trumps plans for protectionism. 

The Fed increased the US interest rate by 25bps to 1%. Widely anticipated across the markets due to recent hawkish comments from Fed members in the run up to the decision, they did not signal an acceleration in the pace of monetary policy. Further rate increases are likely to be gradual and the Fed’s assessment suggests two more hikes in 2017, putting the interest rate at c.1.375% and c.2.125% by the end of 2018.

Central banks were the focus of last week which delivered surprises in the UK and US. The BoE kept the interest rate unchanged at 0.25% and asset purchases at £435b in line with expectations. GBP was back above $1.24 this morning, the highest level since February, but has since fallen to mid $1.23 as the market closes for London. A disappointed market saw USD fall immediately after the event. EURUSD reached a high of 1.0745 and GBPUSD moved back up to 1.23. USD reversed some of the losses the following morning at GBPUSD-1.2250 and EURUSD-1.0710 which could have been the result of some profit taking. The US Dollar has opened the week on a softer note.

GBP/EUR

Conflict expected in Brexit negotiations and data suggesting a slump in growth has the potential to push GBP lower in Q2. For clients with a requirement to sell EUR we suggest a target level of around 1.13.

EUR/USD

The Pound is believed to be largely undervalued against USD/EUR therefore once markets become more comfortable with the idea of Brexit we believe GBP might regain some of the losses over the past 9 months. But for now, the uncertainty is too great and the outlook for GBP for the next quarter remains to the downside.

For the period at the end of Feb/beginning of March EUR/USD pair traded within a narrow range of around 1.05-1.0650. Over the past two weeks the Euro broke above these levels and has slowly gained some momentum. We believe that EUR could come under some pressure with the upcoming the French elections at the end of April. A clean break below 1.07 could suggest a reversal in the recent trend.

As we add the finishing touches to this report it only remains for us to wish you well for the coming week and to remind you that no one has a crystal ball. Anyone that tells you they can predict the future with any degree of certainty maybe similar to the Siren’s call and may well lead to misfortune. However, some can offer you educated opinion and attempt to provide some thoughtful, common sense guidance. Not trading your currency requirements is as much of a risk and a gamble as trading. The markets will move, volatility will vary but whatever your foreign currency exchange and international payment requirements are, you can rely on the team here at Aston Currency to assist you to mitigate your downside risk and be efficient with your exchange rates.

 Please keep your fingers crossed for us on Wednesday when we hear the results of our nomination for the “Foreign Direct Investment Award” for outstanding providers of financial services, currency exchange and related services. 

Written by Damien Lipman

FDI Awards Nomination

Foriegn Direct Investments Awards

Aston Currency Management are delighted to announce that we have been nominated for the ‘Best Financial Services and Forex Provider’ category at the Foreign Direct Investment (FDI) Awards.  Nominees in the category must demonstrate themselves to be outstanding providers of financial services, currency exchange and related services. The winner will have delivered outstanding service to clients and ensured the efficient management of foreign direct investment.

What Are The FDI Awards?

Established in 2013 the FDI Awards celebrate the best in inward investment and foreign direct investment services.

These Awards are presented to those high-net worth individuals, companies and organisations who by their splendid efforts have facilitated the remarkable success story that is Foreign Direct Investment into the United Kingdom.

What Next

We’re proud to be recognised as one of the best financial services and forex providers in the UK and hope that we’re able to bring the award home on the 22nd March. 

For more information visit: http://www.fdiawards.com/

ACM Update - 13 March 2017

Has the triggering of Article 50 been fully priced into Sterling yet? Will there be a sharp drop in the value of Sterling when negotiations start in earnest? Will Scotland prove a thorn in the side for Theresa May? They certainly weren’t at Twickenham on Saturday that’s for sure.

It was confirmed today that Scotland will seek permission to hold a second referendum on Scottish independence. Add this to the expected fractious nature of negotiations with the EU and Sterling may be in for continued downside pressure. I expect investor confidence in Sterling to suffer. If you have a requirement to convert Sterling into US Dollars levels above 1.20 may be viewed as good value over the coming months. I expect us to be trading under 1.20 on Cable (GBP/USD) by the end of March. If negotiations take a pragmatic approach from all sides then there is the argument that Sterling may rally. At present, I think that is a huge if. Negotiations will be as frustrating as continually being asked at the supermarket if you would like a bag. No, I’m going to carry the 37 items home on my head thanks very much.

Sterling has settled slightly higher against the USD and EUR after some initial volatility on the release. This is largely down to the fact the news was ultimately expected and now it’s out the way. If you have a USD SPOT requirement it may be prudent to lock in some of the gains today. Please contact the trading department for a rate of exchange.

Sterling has largely been on a downward trend despite some intraday spikes. I expect this pattern to continue for the foreseeable future. You can view GBP/USD movements on the graph below last week -

GBPUSD 06-03-2017.png

What do we have out this week? We have the small matter of the Federal Reserve meeting on Wednesday. We had the NFP (Non-Farm payroll) figure out on Friday and that printed 235K. The rhetoric of Fed officials on the subject of a rate rise has grown more hawkish. Will we definitely have a rate rise this week? There are no definite’ s although I would be extremely surprised if we didn’t see a hike as indicators are proving strong. The news conference will be the main focus for traders and investors rather than the rate decision. What is their few further ahead? How many future rate rises do they expect this year and into 2018? Should we have the expected results then I would expect the US Dollar to strengthen. Add the strong dollar against the downbeat Pound and that’s the reason why I see us under 1.20 the figure on Sterling/Dollar.

If you have a requirement to purchase USD from GBP please do consider executing a trade prior to Wednesday evening. This will help protect you against likely falls on GBP/USD. If you have a requirement to convert USD into GBP my suggestion would be to implement market orders at 1.2150/1.21 and then out for two weeks consider an order at the psychological level of 1.20.

Sterling/Euro

Is the Euro on the comeback trail akin to Barcelona against PSG? Perhaps not quite although there does seem to be more behind the single currency at present. We had the ECB policy review on Thursday and Mario Draghi, the ECB president, indicated that risks to growth has improved. There has been an improvement in Euro area economic data and indicators recently with PMI (Purchasing Managers Index) approaching six year highs. Will the good news continue to flow out of the Eurozone? Potentially. The main risk events are still political. We have the Netherlands elections on Wednesday and whilst the ‘populist movements’ have lost ground against the main parties there is still a risk. Markets will pay attention to the Dutch elections although the French elections are going to prove to be the main political risk event for the Eurozone this year. EUR/USD has rallied and printed above the 1.07 level in recent trade and although we have had a slight rebound on Sterling/Euro today the risks are still weighed to the downside on GBP/EUR.

Do you have a requirement to convert Euro’s into Sterling? It may be prudent to take advantage of some of the gains and cover off a significant amount on a SPOT basis and then implement and stagger market orders around 1.14 then 1.1350. Please contact the trading team to discuss rates of exchange.

Where is GBP/EUR likely to go? Whilst we are trading under the 1.15 level downside risks remain. I would expect us to trade in a range of 1.12-1.17 over the next few weeks with my view being we are likely to see further moves lower.

As always, please contact us to discuss implementing a plan to make sure you mitigate your currency risk. The next few weeks are likely to throw up increased volatility with the leap into the unknown of triggering Article 50 the main catalyst.

If you have any questions please do let me know.

Have a fantastic week.

Written by Liam Alexander