ACM Update Tuesday February 20th 2018

EUR/USD has come off recent highs and retraced back to around 1.2340. Will the phrase “don’t count your chickens” apply to Sterling after it has pushed higher against the Euro? Much like the aficionado’s of KFC this week I guess. 

Sterling/Euro

Sterling has gained some ground against the Euro at the start of this week. We moved back to the 1.12s last week and those that had a Euro exposure back to GBP did well to lock in at those levels. As mentioned before, GBP/EUR is relatively range bound from 1.12-1.15. Could things move out of this range? I hope so. If we’re stuck between 1.12-1.15 from now until the end of eternity things will be exceedingly dull.

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

GBPEUR.png

Where will GBP/EUR go from here? It will move higher short-term. If you have a requirement to convert Sterling into Euro this week I would consider implementing market orders. This will allow you to achieve the best rate at the best possible time. Please contact the trading department to discuss technical levels.

I do expect Sterling to give up its recent gains against the Euro by the end of Q1. The March meeting between the UK and EU will be key and I expect negotiations to start in earnest. Up until now it has been a warm up. Short-term, on the data front, we have Unemployment figures out of the UK on Wednesday. Expectations are for a print of 4.3%. Should we see a better than expected figure then we may see GBP gain further ground. We also have the release of GDP figures for Q4 from the UK on Thursday.

If you need to purchase Euros from GBP consider locking in some of the recent gains on SPOT or a short-dated Forward Contract.

Sterling/Dollar

We have been flirting with 1.40 the figure for a while now. There is no real momentum in either direction on Cable (GBP/USD). We moved above 1.41 although that was where traders decided to take some profit. We have since retraced back under the 1.40 level. If you have a requirement to purchase USD from Sterling please do consider implementing a market order to execute at 1.40. This gives you a price point to work from. Unless you are enthralled by watching rates on a screen all day then place an order in the market and leave us to do that for you. Could we move back to 1.42/1.43? Absolutely. However, as I always say doing nothing is speculating. Take some risk off the table, give yourself a level to work from and we can then work out an ongoing strategy for you. This may be a simple 40/40/20 structure where we cover off 40% on SPOT, 40% on a Forward Contract and the remaining 20% on market orders.

Sterling/Dollar has been tumbling around like a person strapped into a gurney hurtling face first down some ice or as it is passionately known in winter sports, the Skeleton.

You can view the movement on Cable (GBP/USD) on the graph below –

GBPUSD.png

If you have a requirement to move USD back to GBP and can achieve under the 1.40 level I would consider locking in a sizeable amount at that level. Please contact the trading department to discuss timing and rates of exchange. We have FOMC minutes released from the US on Wednesday this week where interest rates and the speed and number of rate increases will be keenly watched by market participants. I would expect another bout of USD strength so do make sure you have discussed a strategy with us for your currency requirements.

If you have any questions please do let me know.

Have a great week.

Written by Liam Alexander

ACM Update Monday February 12th

The winter Olympics are underway. Sterling and the UK on ‘Brexit’ is mirroring the Luge. Hurtling downhill, strapped in for dear life, ‘skillfully’ manouevring the corners whilst hoping to come to a smooth standstill rather than crashing like the Jamaican bobsleigh team in the movie Cool Runnings. We will see how the UK/EU movie plays out this year.

Sterling rallied higher against the US Dollar and Euro last week on the back of the Bank of England’s ‘Super Thursday’. (It sounds like an offer from a 1980’s supermarket but never mind we’ll need to live with the phrase). As expected, interest rates were kept on hold at 0.5%. Sterling jumped across the board on growth forecasts for 2018 being revised higher to 1.8% from 1.7% and more importantly on expectations that interest rates will rise quicker than previously expected.

 

GBP/USD

Sterling moved back above 1.40 the figure on the back of the Bank of England. With politics and profit taking being key Sterling has given up the gains it made and moved lower.

You can view the recent movements on the graph below –

GBP/USD 1 Week

If you are holding USD please consider locking in some of the move lower. Might Cable (GBP/USD) push lower? Of course. However, we’ve been over 1.42 so if you can achieve under 1.40 the figure to convert USD into GBP it may be prudent to do so. Please contact a member of the trading department for a rate of exchange. If you think we’ll see GBP push lower discuss technical levels with the trading team to implement market orders to help you achieve the best rate at the best possible time.

We had a lot of volatility last week so this week we may see some range bound trading. As always, ‘Brexit’, Theresa May and political posturing can always act as a headwind for Sterling so make sure you have discussed a strategy with us for your exposure out till the end of Q1.  The main data out of the UK this week is Retail Sales (Jan) that is released on Friday. Other than that, we have inflation data out in the form CPI (YoY) (Jan) tomorrow where expectations are for a print of 2.9%.

Do you need to purchase USD from Sterling? Consider placing market orders to the upside should Sterling benefit this week. Please contact a member of the trading department to discuss.

 

GBP/EUR

We moved back over 1.14 the figure last week. Since then we’ve gradually traded lower. As stated at the start of the year I see Sterling moving lower against the Euro for Q1. We are trading in a range of 1.11 with 1.15 being toppish. Should we break out of this range to the downside then the 1.10 level opens up again. For now, I think we’re going to stick in the 1.11-1.15 range. Therefore, timing your transactions is key. If you are buying Euro’s from GBP get in touch and we can discuss your timeline on when you need to trade and put in place orders to take advantage of moves in your favour on an intraday basis.

We will see some dips on GBP/EUR with ongoing comments in the Brexit negotiations likely to weigh on Sterling rather than give it any impetus. EUR/USD has retreated from around the 1.25 figure with EUR long positions being cut. Could we see EUR/USD make another move higher against the Dollar? Quite possibly. That in turn could add further weight to a downside move in GBP/EUR.

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

GBP/EUR 1 Week

As mentioned earlier it is a relatively light data week. Please get in touch to make sure you have a strategy in place for your currency requirements as the landscape can change rather quickly.

If you have any questions please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update Tuesday 6th February 2018

Two great symbols of American culture fought it out on Sunday night in the ultimate contest of strength, agility and mental acuity when one of the Kardashians announced that another one of the Kardashians was pregnant and won the Superbowl. Well played Kris Jenner, displaying a greater grasp of media manipulation than anyone from the Trump administration can even fathom.

Theresa May faces yet another looming spectre of malcontent amongst her government as our comedic Foreign Secretary BoJo and cohorts Gove and Rees-Mogg are lauded as a “dream team” by Brexiteers hell bent on leaving the customs union. Global stock markets are falling in what many are calling an obvious and natural correction whilst crypto currency values are also suffering from what appears to be a pre-Valentines sell off. No one can say that the last 10 days have been boring!

GBP/USD

This week The Bank of England is expected to leave the interest rate unchanged at 0.50% after hiking it to its current level in November. However, they will likely move the market. In addition to the decision and the meeting minutes, the BOE will also publish the Quarterly Inflation Report, which contains a wider assessment of the economy and the path of inflation. This “Super Thursday” can be upgraded to “mega” with the publication of the Inflation Letter. Governor Mark Carney is obliged to send an open letter to the Chancellor of the Exchequer, Phillip Hammond, and explain why inflation breached the 1-3% range. This happened for a limited time and inflation is expected to fall. None the less, any deviation from a unanimous vote to leave rates unchanged will stir the pound. Afterwards, the assessment of the economy and more importantly, inflation, will have its say. Watch this space but don’t count your GBP chickens as Brexit negotiations maybe causing UK PM Theresa May more trauma and the US jobs report has not been fully priced in to value yet.

GBP appears to be nose diving again, certainly it has lost USD 4.20 since the beginning of the month  and looks to be on a clear trajectory. Clients selling USD requirements might wish to take advantage of the recent moves by securing funds with a series of spot and forward contracts. By all means, please get in touch with one of trading team to make these arrangements.

You can see the movement on GBP/USD from last week to this morning on the graph below:

GBP/USD 1 Week

GBP/EUR

Interesting points to watch for include tomorrow when Germany releases industrial production figures which reported a rise in November, by a surprisingly strong 3.4%. Probably the same again here but with a downwards correction forecast of 0.4%. France will release their trade balance tomorrow. The continent’s second-largest economy has chronic trade deficits. The deficit widened to EUR 5.7 bn in November. A narrower deficit of EUR 4.8 bn is on the cards now. Germany to the rescue again as contrary to France, Germany has a very wide trade surplus, buoying EUR. After enjoying a surplus of 22.3 billion in November, a drop to 20.4 billion is on the cards now.

On Friday the UK announces its trade balance and Britain has a trade deficit that has widened since the EU Referendum. A deficit of GBP 12.2 bn was recorded in November although, a reduction to GBP 11.5 bn is predicted now. Clients selling GBP may want to hedge further downside risks by securing funds on spot or forward contracts before Thursday morning.

You can see the movements on GBP/EUR on the graph below:

GBP/EUR 1 Week

EUR/USD

EUR/USD managed to edge a bit higher but it certainly wasn’t easy last week where we saw USD attempt to recover. This week features a testimony from ECB President Draghi and a mix of many economic indicators. Headlines included core inflation finally ticking up back to 1% y/y but that was expected. In the US, the jobs report came out above expectations, 200K jobs gained and wages rising 2.9% y/y. It came on top of a slightly more hawkish Fed decision and helped the USD in its recovery attempts, which were certainly met with resistance by EUR, although it seems to continue to lose ground.

Please do not hesitate to get in touch with us to discuss any of the strategies we can provide you with to help mitigate downside risk on all of your currency exposure.

You can see the movements on EUR/USD on the graph below:

EUR/USD 1 Week

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, 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 am going to try and catch up on the Six Nations in the hope that no reality TV people will give the game away. Have a great week.

Written by Damien Lipman

ACM Update Monday 29th January 2018

Last week Sterling rose like the water level in the River Seine. GBP was up against the dollar to over 1.43 the figure. Will the dollar flood recede this week? Will Sterling give up the buoyancy aid it somehow found? Or will the Euro keep pouring further cold water on Sterling and the US Dollar?

Sterling/Dollar

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

GBPUSD 29-01-2018.png

We peaked over 1.43 and have since had a retracement in recent trade back under 1.41 the figure. Sterling rode a wave of optimism on earlier than expected rate hikes from the Bank of England, the unemployment rate remaining at 4.3% and GDP figures surprising to the upside for Q4 with a print of 1.5% against expectations of 1.4%. All was going so well for Sterling. Then it wasn’t. Conservative Party infighting returned to the table and the all too familiar Brexit woes. We will see pockets of better than expected UK data although it only takes political uncertainty and details of a breakdown in transition talk strategy and negotiating stance to derail Sterling. The direction of Sterling this year is precarious. If you have a requirement to purchase USD from Sterling lock in some of the albeit reduced gains of the past week before we potentially see a sustained reversal in GBP fortunes. Please contact the trading department for a rate of exchange.

We have the US Federal Reserve meeting on Wednesday and the release of ISM Manufacturing data on Thursday. The release of the NFP (Non-Farm payroll) report on Friday rounds off the main events from the US this week. We don’t expect any policy change on interest rates. We expect a strong showing from the labor market although with the labor market almost at full capacity it will become more challenging to post better than expected figures. Expectations are for the creation of 175K new jobs in January. Anything above this figure should give some impetus to the embattled Dollar. We expect the unemployment rate to remain on hold at 4.1%.

If you have holdings in USD and need to convert back to Sterling consider implementing market orders from 1.40 and try and take advantage of moves lower in your favour. Please contact the trading department to discuss technical levels to execute at to give you the best opportunity of achieving the best rate at the best possible time.

Sterling/Euro

We had the ECB (European Central Bank) meeting last week. Mario Draghi, the ECB president, didn’t talk down the Euro. He seems comfortable with the strength of the currency at present. He doesn’t expect any interest rate rises before the end of QE and sees inflation ticking up over the medium-long term. Due to the comments the Euro pushed higher with EUR/USD breaking through 1.25 the figure. This in turn nudged Sterling/Euro lower from the giddy heights of around 1.15 back below 1.14 the figure.

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

GBPEUR 29-01-2018.png

With the UK continuing to struggle in Brexit talks Sterling may be coming up for some pressure. As detailed at the beginning of the month, I expect Sterling to come off against Euro in Q1. Throughout the course of the year I expect GBP to nudge higher against the Euro. If you have requirements to lock in for Q1 from GBP to Euro it may be worthwhile taking some risk off the table and fixing a price point to work from. Cover off a significant amount of your exposure and look at leaving a portion to play with should there be any moves in your favour.

 

If you are trading from Euro into GBP it may be prudent to lock in the recent fall from over 1.15 the figure. Yes, under 1.10 would be wonderful although if you look at things on a historical basis you are at very good levels to move back into GBP. Please contact the trading department for a SPOT price or to lock in a forward contract out on a 3 month basis.

Tomorrow we have GDP (QoQ) (Q4) and (YoY) (Q4) out of the Eurozone. Expectations are for 0.6% and 2.6% respectively. We also have the Governor of the Bank of England, Mark Carney speaking. On Wednesday we have inflation data out of the Eurozone in the form of preliminary CPI figures. The US data releases mentioned above rounds off the releases this week.

Market movements this year are likely to be severe. Please make sure you de-risk any currency exposure you have by working in partnership with us to create a strategy that best suits your individual requirements.

If you would like to have a detailed discussion feel free to contact me directly.

Have a fantastic week.

Written by Liam Alexander.

ACM Update Monday 22nd January 2018

Politics continue to be the main mover for the US Dollar. Is GBP/USD going through 1.40 the figure? Is it a bit chilly in Antarctica this time of year? Expect the Dollar to remain under pressure as long as the Government shut down continues. Dollar weakness will be supportive of an upside move on Sterling/Dollar. I expect a push through 1.40 the figure although we may see a retracement lower once we have broken through 1.40 as traders may take profit on positions.

If you have a requirement to purchase USD from GBP lock in the recent moves to the upside. You can view the shift higher on the graph below –

GBPUSD 22-01-2018.png

If the Government shutdown ceases? We’ll see a rally in the US Dollar. Lock in the moves on SPOT or on a Forward Contract to purchase USD. Might it push through 1.45 this year and onto 1.50? Possibly. As we’re operating in a ‘new normal’ moves can quickly and aggressively shift direction. Please contact a member of the trading department for a rate of exchange.

Holding US Dollars? Decision time for the remainder of Q1. EUR/USD has hit three year highs above 1.23. Are we going back to levels around 1.25? We have the ECB meeting this week where we expect a more hawkish tone so this may prove the catalyst for a further nudge higher for the single currency. Indeed, the Euro, as we expected, has started the year strongly. Should Mario Draghi, the ECB president, disappoint the market then we’ll be having conversations on EUR/USD edging back to 1.20 the figure. However, I expect the Euro to maintain a positive bias versus the US Dollar for Q1 at the very least.

Back to Cable (GBP/USD). Historically, you’re still at very good levels to convert USD into GBP so it may be prudent to take some risk off the table now and lock in some GBP. We can stagger orders to the downside for you and try and take advantage of any moves lower so you allow some room to capture any upside potential.  Please contact the trading department to discuss implementing market orders.

On GBP/EUR, it’s all kind of well, a bit, ‘meh’. Nothing much is happening. We’re trading in a range of 1.11-1.14. If you can achieve a level above 1.13 to purchase EUR from GBP I would look at locking some in at that level. I think Sterling, on balance, will shift higher against the Euro as the year progresses although for Q1 I don’t see any massive moves in either direction. Should Mario Draghi strike a hawkish tone then we could see GBP/EUR reverse its recent gains. Have a EUR balance that needs to be converted into Sterling? Consider staggering orders to the downside for EUR back to GBP. Please contact the trading department to discuss technical levels and appropriate levels to aim for. Should you wish to discuss your Q1 requirements in more detail please feel free to contact me directly.

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

GBPEUR 22-01-2018.png

What do we have out this week data wise? Main release as mentioned above is the ECB meeting. We also have the ILO unemployment rate (3M) (Dec) out of the UK on Wednesday. There is also GDP figures out of the UK and US this week with Mark Carney, the Bank of England Governor rounding off the week.

Should you have any questions around your currency requirements feel free to drop me a note.

Have a fantastic week.

Written by Liam Alexander.

Bank Charge Changes within European Economic Area

We would like to advise you of a change to the bank charges on foreign payments within the European Economic Area (EEA).

Under the Payment Service Directive, banks are now under an obligation to apply Shared Charging to all international payments, regardless of the currency, between EEA countries.

What does this mean for me?

If your bank account is based in any EEA country you may notice that your payments are received in short of a bank charge. This is due to ACM no longer having the facility to pick up bank charges on both the sending and receiving side of the transfer. Under the Directive, we now only have the option to pay the charges applied by the sending bank and the payee will incur any charges applied by the recipient bank. This is known as Shared Charging.

There are currently no changes to foreign payments outside the European Economic Area (EEA). If you wish to pay an account based outside of the EEA we will continue to pay all the charges.

Please don’t hesitate to contact us if you have any questions.

ACM Update Monday 15th January 2018

After all of the homegrown terror of the false alarm ruining weekend "luau" in Hawaii, Trump allegedly using unfortunate “colourful” language to describe an already heavily beleaguered Haiti. And the previously unimaginable requirement for him to have to declare himself “not a racist”. Today, in the US they are celebrating Martin Luther King Day. The irony is not lost on us here in the UK and we are celebrating a remarkable rally for GBP against USD and wondering what happened with EUR. Things may change tomorrow but for now, today has had something for everyone.

GBP/USD

A softer USD and higher GBP saw Cable close the week climbing back from 1.346 to well above 1.37 for the first time since June 2016. GBP climbed to hold at just over 1.38 today. GBP may well lose some of it gains tomorrow when the US gets back to work but they must come to terms with how Trump has chosen to describe Haiti. Will the dollar weakness persist in the coming weeks? The pair is heading towards 1.3834 (low of 2016 H1) where we could see some resistance. A clean break above this level could suggest further upside towards 1.40.

No matter what happens over the next week, if you have to move GBP to USD in your budgeting for the year, you may also wish to consider taking some of your risk off the table by fixing forward rates of exchange, at least for part of your exposure. Please contact one of the team to discuss mitigating risk over the coming financial year.

GBP/USD movement can be seen on the graph below:

GBP/USD 1 Week

GBP/EUR

Data will be light over the next few days. In the UK inflation figures, due on Tuesday, are expected to have cooled in December to 3.0%. Retail sales figures due on Friday will also gather some interest as sales are expected to have fallen last month. If numbers come ahead of the forecast this could help lift GBP further but the currency will be all the more sensitive to Brexit related headlines. There are no key releases for the Euro-area except for inflation data out tomorrow morning (16th) which is forecast to ease to 3.0% compared to the same time last year, from 3.1% in November. CPI is expected to remain unchanged at 1.4% (year-on-year) for December.

Please consider mitigating further downside risk to EUR value and possibly take a view with spot trades in the short term. The longer term consensus view is moving away from GBP crashing against its usual comparators but there are still those that think recent events are simply GBP climbing to a higher diving board. Recent highs may be a good time to consider fixing forward rates.

GBP/EUR movement can be seen on the graph below:

GBP/EUR 1 Week

EUR/USD

If you were looking for some small excitement in the form of volatility, then you have come to the right currency pair. EUR/USD hit the highest levels in over three years today topping out at just under 1.228. Is there more to come? Final inflation figures stand out in the week before the ECB decision. EUR is now clinging onto its gains like someone who can’t let Christmas go and won’t take down the decorations. You know who you are. If reports from China are correct, their diversification away from US Treasuries may be beneficial for the world’s second currency (EUR). In addition, the gradual advance of the ECB towards removing stimulus contrasts the Fed’s dilemma with low inflation. To plan through a strategy for EUR/USD exposure please contact your relationship manager.

Euro movement against the Dollar can be seen on the graph below:

EUR/USD 1 Week

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, 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 am going to have a row about whether or not it is bad manners to leave a Christmas tree up.

Have a great week.

Written by Damien Lipman and Tillie Grothier

ACM Update Monday 8 January 2018

We are firmly in the throes of ‘dry January’ with people drinking Kombucha tea for no apparent reason at all. I’m sure it’ll counterbalance those doughnuts come February. Last week was rather dull in currency markets with low volatility present across the majority of currencies. This week, things should start to get more interesting with market participants back from holidays.

GBP/USD

Where are we likely to trade this year on Cable (Sterling/Dollar)? As always, forecasts are as wide as the Grand Canyon. Some analysts are calling Cable at 1.50 whilst others see GBP/USD trading under 1.30. Whilst I think the US Dollar will come under some pressure this year Sterling will have a large say in the direction of Cable (GBP/USD).

We have settled above 1.35 the figure in recent trade. You can view the recent price movements on the graph below –

GBPUSD 08-01-2018.png

Progress in Brexit talks and expectations for further interest rate rises from the Bank of England this year has shifted GBP higher against the Dollar. Will this trend continue? Short-term, yes. The Dollar was down at the end of 2017 and although it has clawed back some ground early 2018 it isn’t anything substantial. We had Non-Farm payrolls released on Friday with 148K jobs added. This figure was under expectations. The US will find payroll expansion more challenging this year with full employment in the US labor market becoming closer and the unemployment rate unchanged at a 17 year low of 4.1%. This should push wage growth higher in the US. How many interest rate rises will we have in the US this year? Will US tax reform have a significant impact on economic growth? How will President Trump shape US politics this year? We will have a clearer idea once the markets get into gear in the coming weeks. That will shape either a Dollar positive or negative view.

Whilst I think GBP/USD will push higher short-term if you hold GBP and need to purchase US Dollars I would look at locking in recent gains. If you can achieve around 1.34/1/35 on GBP/USD I would consider this good value from where we have been trading. Please contact the trading department for a current SPOT or Forward rate. We are experiencing low volatility at present so any spikes in Cable (GBP/USD) are likely to be limited so consider a SPOT transaction for now rather than implementing a market order. Should EUR/USD regain the 1.20 handle then this may drag GBP/USD higher.

If you hold USD and need to convert to GBP you need to weigh up the risks of a negative Dollar move. Might we come off recent highs from around 1.35 and retrace the move back down? Possibly. However, the uptrend looks set to continue so it may be prudent to cover off some of your Dollar exposure back to Sterling at current levels. Please contact the trading department for a rate of exchange. As we always say, doing nothing is speculating. Give yourself a price point to work from.

GBP/EUR

The great enigma. Where is GBP/EUR going to trade this year? I’ve been negative GBP/EUR for a long time and I don’t see anything to change this view Q1’18. Q2 onwards, GBP/EUR should start to push higher.

You can view the recent price movements on the graph below -

 

Sterling/Euro has been trading in a tight range the last few weeks, as expected. Will we start trading out of this inactivity? I don’t see any wild swings in either direction for Q1. UK consumer spending is slowing, inflation is high and real wages are falling so this may prove a drag on GBP. UK politics will of course play a major role in the direction of Sterling. A cabinet reshuffle is expected to take place shortly. Will the UK get a ‘transition’ deal with the EU? The EU summit in March is looking a key month for the UK Government. If we get a transition deal then this should send the Pound higher. If we don’t, then expect GBP/EUR to trade under 1.10 the figure in Q2. Will the ECB end its stimulus program this year? The Eurozone is out the woods of deflation and whilst it probably won’t reach its target rate of 2% I think policymakers will be flexible on that front. EUR/USD broke through the 1.20 level and I expect the Euro to push higher against the Dollar Q1 this year.

If you hold Euro’s consider converting a sizeable portion of exposure back to GBP at current levels. You then have a rate to work from for 2018. Please contact the trading department for a current rate of exchange. I expect the rate, should we get a transition deal and a ‘soft’ Brexit to be significantly higher by the end of 2018. Take some of your risk off the table at current levels.

If you are buying Euro’s from GBP I would implement a series of market orders to take advantage of any moves to the upside. Please contact the trading department to structure these at appropriate levels. The trading team will be able to provide you with key technical levels to aim for.

This week, the data calendar is relatively light. The main release for the Dollar is Retail Sales (Dec) on Friday in addition to CPI (YoY) (Dec). The main releases that should impact the Euro are Unemployment figures, Retail Sales and industrial production figures. UK wise, there is nothing of note other than

Industrial and Manufacturing figures released on Wednesday.

If you are back at your desk today from the festive break and haven’t considered your FX strategy for the year ahead drop me a note.

Have a fantastic 2018 and any questions please let me know.

Written by Liam Alexander

ACM Update 18 December 2017

One week until Christmas Day. The Christmas jumper has been wheeled out once and been retired for yet another year. Mince pies have been eaten. A Christmas theatre show has been done. Christmas shopping? I’m kicking that can down the road for a little while longer! It’s almost as unbearable as listening to Justin Bieber sing a Christmas song. Or any song for that matter.

What will the final week before Christmas day bring in the currency markets? I imagine it will certainly be quieter than the throngs of shoppers on Oxford Street fighting for a Tamagotchi or Nerf gun or whatever the latest craze is. Markets will start to ease this week with currencies likely to trade in narrow ranges unless something dramatic happens in the political or Brexit sphere. Everyone will start to decamp for the year so liquidity will start to thin out. As you can probably expect economic releases are rather limited this week. We had inflation data out of the Eurozone this morning with CPI (MoM) and (YoY) coming in at 0.1% and 1.5% respectively. This was in line with expectations.

Last week we had a busy week with the Bank of England, ECB, and Federal Reserve meeting. As expected, the Bank of England meeting was a non-event. Interest rates were kept on hold on 0.5%. The ECB (European Central Bank) met and communicated that interest rates are to stay at current levels for an extended period. The Federal Reserve increased interest rates to 1.5% in line with expectations. 

Sterling/Euro

We have been trading in a relatively tight range for quite a while now. You can view movements last week on the graph below –

GBPEUR 18-12-2017.png

Going into the final few trading days of 2017 do consider a Forward Contract up until end of January ’18 to take some of your risk off the table when purchasing Euro’s from GBP.

I expect GBP/EUR to come under some pressure with the Eurozone growth forecasts looking strong for next year. This year, the Euro is up over 4% against Sterling and I don’t see much to think that Sterling is going to be stronger than the single currency next year. Theresa May and the elves will need to work hard in the Christmas factory to prepare for next year. Trade talks will be more challenging than the negotiations we’ve had up until now.

If you are selling Euro’s to purchase Sterling please get in contact with the trading department. My suggestion is to implement market orders to the downside to take advantage of any moves over the festive period.

Cable (Sterling/Dollar)

If you have a requirement to purchase USD I would look to convert some on a SPOT basis at current levels. We’ve recovered from the 2 week low and are trading back above 1.34 the figure. This to me looks toppish for the year and I would expect a retracement back down to our end of year forecast of 1.32. If you would like a SPOT rate please contact the trading department directly.

You can view movements last week on the graph below –

GBPUSD 18-12-2017.png

The dollar has been under pressure since the Federal Reserve disappointed investors by not signaling a series of quick rate increases in 2018 and two policymakers voted to keep rates on hold. There is also still a chance of a Government shut down in the US on tax reform concerns although I expect this to be resolved. The Dollar will be under some pressure until this is rectified although I expect a Dollar recovery. The main release this week will be the US GDP Annualised (Q3) figures that is expected to print 3.3%.

If you hold USD and are looking to convert back to Sterling I would implement market orders to take advantage of a potential Dollar bout of strength in the closing stages of 2017.

Please get in touch in the coming days should you have any currency requirements this week.

We will be open in between Christmas and New Year bar bank holidays.

Have a very Merry Christmas and best wishes to you and family over the festive period.

Written by Liam Alexander

ACM Update Monday 11 December 2017

It's beginning to look a lot like Christmas

Everywhere you go…

A few inches of snow and suddenly the UK all but shuts down with flights cancelled, schools closed (because they cannot be heated rather than accessed) and consumer spending in the UK is set to hit a 5 year low in 2017, according to the credit card companies, themselves not usually known for their “Christmas Spirit” Bah Humbug! The overall squeeze on consumer spending has been blamed on a combination of factors, namely: inflation (which has been at a five-year high of 3% since September), the fall in the pound since June 2016’s Brexit vote, and stagnant wages.

Take a look in the five and ten, glistening once again,

(probably talking about the new polymer GBP notes…..)

With candy canes and silver lanes aglow

It has definitely been “one of those weeks” both in the world of international politics and in the markets but for very different reasons. None the less, we can’t all be a Scrooge….

It's beginning to look a lot like Christmas

Toys in every store….

 …..especially Theresa May who, on Friday, hailed “a new sense of optimism” in Brexit talks in her statement to Santa’s Little Helpers in Parliament. Reiterating that it was never going to be an easy process, she now fully hopes to be able to confirm arrangements set out last week, coining a new catch phrase that is about as meaningful as “Brexit means Brexit” when she said, “Nothing is agreed until everything is agreed.”

But the prettiest sight to see, is the holly that will be

On your own front door

GBP/USD

Cable rose and fell on the twists and turns in the Brexit negotiations in a volatile week principally based more on GBP’s fate than USD value. The focus for this week will return to are top-tier events with the inflation report, jobs, retail sales the Bank of England. An agreement on the Irish border was coming close and GBP spiked, only to crumble as the DUP opened the oven door too soon. A “regulatory alignment” on the Island of Ireland could then have opened the door to a softer Brexit for all, only for a compromise to be reached on the wording of the text related to the Irish border. 

The British government is still on the path to a hard and quite expensive Brexit and GBP value gave that back, in part, to USD. Over the pond USD continued to enjoy progress based on tax reform and seemed to ignore mixed data ahead of the Fed decision. So whilst the US economy has its own troubles, GBP remains under immense pressure. Clients selling USD requirements might wish to take advantage of the recent moves by securing funds with a series of spot and forward contracts.

GBP/USD movement can be seen on the graph below:

GBPUSD 11-12-2017.png

A pair of hop-along boots and a pistol that shoots

Is the wish of Barney and Ben

Dolls that will talk and will go for a walk

Is the hope of Janice and Jen

And Mom and Dad can hardly wait for school to start again

GBP/EUR

In the UK, we have inflation and wage data out for November which will give the market a brief break from politics, although, this won’t last too long as the EU committee will meet on Thursday to discuss Brexit progress. Inflation is expected to have remained unchanged at 3% and the unemployment rate at 4.3%. The data could provide some support to GBP this week. The main release for EUR are the PMIs due on Thursday. Both services and manufacturing are expected to edge lower therefore we could see a softer EUR at the end of the week.

Clients selling GBP may want to hedge further downside risks by securing funds on spot or forward contracts before Thursday morning.

 GBP/EUR movement can be seen on the graph below:

GBPEUR 11-12-2017.png

It's beginning to look a lot like Christmas

Everywhere you go

There's a tree in the Grand Hotel, one in the park as well

The sturdy kind that doesn't mind the snow

EUR/USD

The European Central Bank meets this week amid low inflation and no one knows how long the QE program will continue. We do not expect any great EUR reaction to the ECB announcement, but many commentators maintain their medium-term bullish view on EUR. Even after the somewhat disappointing October decision, EUR has been trading resiliently, though now the ECB may provide no fresh catalysts next week and EUR downside risks should be limited.

Into the middle of next year, many expect ECB communications to turn gradually more hawkish to let markets price the end of QE in September. Perhaps then another acceleration in EUR appreciation is likely despite more range-trading continuing for now. ECB President Mario Draghi did not rock the boat in his speech last week.

In America, hopes for fiscal stimulus faded early in the year, though are now on the rise again, with Trump’s tax plan. The Federal Reserve has maintained its plan for three rate hikes in 2017 despite lower US inflation. In the US, the significant progress on tax cuts sent the dollar higher even if the data were not always that great. The NFP report showed a healthy gain in jobs but also that wages are really stuck. The Fed is unlikely to rock the boat and hike. 

Euro movement against the Dollar can be seen on the graph below:

EURUSD 11-12-2017.png

It's beginning to look a lot like Christmas

Soon the bells will start

And the thing that will make them ring, is the carol that you sing

Right within your heart

Not trading your currency is still a risk. The markets will move, volatility and relative values will vary, and Santa might well get stuck trying to deliver presents at the same time as avoiding the Trump travel ban but whatever your foreign currency exchange and international payment needs, you can rely on the team here at Aston Currency Management. We will be here throughout the holiday period, trading on all but Bank Holidays.

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 bake some mince pies and polish Rudolf’s nose. Have a great week, a very Merry Christmas and a Happy New Year from me. Liam will be back next week to round off the year. To be fair, his singing voice is a lot better than mine…. Ho! Ho! Ho!

Written by Damien Lipman

ACM Update 4 December 2017

Like an inebriated asthmatic baby elephant the UK stumbles nearer a solution to the next round of Brexit talks. Sterling has rallied recently. Will it continue? Or will it come crashing down to earth like a Christmas shopper on a bitcoin fueled mulled wine induced shopping spree?

December 14th is the key date when the EU Council summit convenes. Should there be a breakthrough prior to this date then Sterling will rally. However, I don’t expect imminent progress. The European Courts of Justice issue, along with the Irish border remain significant hurdles to scale in addition to the ‘divorce’ bill settlement.

Expect further volatility around Sterling in December.

Against the US Dollar, Sterling has gained significantly and briefly pushed through 1.35 the figure. 

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

If you have a requirement to purchase USD from GBP consider covering off a percentage of your requirement on a SPOT basis at current levels. We are up over 1% in the past week.

December is a key month for GBP so it may also be worth structuring market orders to take advantage of upside going into end of year. Please contact the trading department or your relationship manager directly to implement these at appropriate levels.

If you are holding US Dollars then look at staggering market orders to the downside. The Dollar has pared some of it losses from last week with news that Trumps’ overhaul of Tax looks set to continue with the US Senate narrowly approving the tax reform.

Have you started to consider your FX risk for 2018? You may want to look at Forward Contracts from now until the end of Q1’18 to take some risk off the table.

Sterling/Euro

Consider taking advantage of the recent upside moves. We have had a move higher and at present we’re sitting comfortably in the 1.13s. Will this be the case in a few weeks’ time? As alluded to above, Sterling/Euro will be impacted on Brexit negotiations this month. Should talks breakdown? Sterling/Euro could be under 1.10 and lower. Make sure you have a plan in place to mitigate some of this potential downside risk. There are various trading mechanisms we can use to assist you. Please get in touch to run through your options.

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

In terms of this week outside of Brexit negotiations we have the ECB President, Mario Draghi, speaking on Thursday. We also have Eurozone Retail Sales (MoM) and (YoY) released. Across the pond, we have the release of the NFP (Non-Farm Payroll) figure on Friday. These releases will cause some volatility on GBP/EUR/USD pairs.

If you have any questions please get in touch.

Have a fantastic week.

Written by Liam Alexander.

ACM Update 27 November 2017

The Autumn budget was a quite remarkable event in recent British politics. I.e. it was quite unremarkable. Something to be celebrated I guess. Small wins and all that. The British Government need to solve the Irish Border issue in the next ten days apparently. If they solve that issue in the next ten days I’ll even pretend to care who Meghan Markle is.

The Euro has been weaker for oh, in the grand scheme of things, about 2 minutes. Germany being Germany, they’ve managed to ease the political and coalition tensions within a week. If the UK thought that Merkel being weakened at home would provide us with a stronger negotiating hand at the table then it looks like we are going to be let down.

EUR/USD has pushed above 1.19 the figure and two month highs with a challenge of 1.20 on the cards in the coming days. In turn, GBP/EUR has dropped below 1.12 the figure after hitting giddy heights above 1.13. 

You can view the movements below on GBP/EUR last week

GBPEUR Graph.png

If you hold Euro’s I would consider taking advantage of the recent move and cover off some into GBP on a SPOT basis. Please contact the trading department for a rate of exchange.

We don’t have too much UK data out this week so there may be an opportunity to implement market orders to take advantage of any further moves lower. The only data releases of note from the UK are the BoE’s Financial Stability Report, UK confidence data, and Manufacturing PMI on Friday.

I don’t see too much upside for Sterling. Politics and the Irish Border issue are going to be a drag on GBP for the next few weeks. However, might there be some goodwill creeping into negotiations? If we continue to hear phrases like “good chance”, “progress is being made” then Sterling might, and it is a big might, gain from this. Whatever happens, I don’t see Sterling suddenly moving substantially higher. UK Fundamentals are far from strong although in the run up to Christmas politics and the EU summit in December take precedent.

If you haven’t already, you should start planning for Q1 ’18 now. Feel free to get in touch and we can discuss a strategy with you for January before everyone hits the gym and “gets healthy” for three weeks.

Sterling/Dollar has moved higher.  You can view the movements on the graph below –

GBPUSD Graph.png

We’re up at 7 week highs on Cable (GBP/USD) trading a little under 1.3350. This has been largely a USD weakness move with a sprinkling of GBP cheer. We were up around 1% last week with US data disappointing to the downside with the manufacturing and service sector expanding at a slower pace than expected.

If you have a requirement to purchase USD from GBP consider locking in a substantial amount at these levels to take some risk off the table going into December and January. I expect Sterling/Dollar to retrace the recent upside with Sterling likely to come under pressure in upcoming trade.

Have you considered forward contracts at these levels? If you haven’t, drop me a line and we can discuss the pricing out for 1 month/3 months and 6 months. It may be prudent to lock some in at a fixed price so you know where you stand into the beginning of the 2018.

If you are holding USD and need to convert back into GBP it may be worthwhile placing market orders at 1.33 to give yourself a price point to aim for. We can then take a view on what to do from there.

Politics will be the driving force for December so please make sure you have spoken with the team at Aston to implement a strategy that best suits your needs.

Have a fantastic week.

Written by Liam Alexander

ACM Update 20 November 2017

The Euro has weakened this morning. German Coalition talks are progressing at the same pace as Mugabe takes to make a decision. Is the Euro now on the back foot after recent moves to the upside? Short-term, yes.

GBP/EUR has moved in a range from 1.11 to 1.13. Are we due to break out of this range? We may see a spike higher in the pair with a breakthrough of 1.13 although I think this will be short-lived. GDP data out of Germany last week proved stronger than expected and fundamentally the Eurozone is in a stronger position than the UK and the US. However, the Eurozone does have its own political problems to deal with in addition to Brexit negotiations so the single currency is still susceptible to volatility. 

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

GBPEUR 20-11-2017.png

If you have a requirement to purchase Euro’s from Sterling I would cover off some on a SPOT basis and then look to implement market orders at 1.13 the figure. I think this will be toppish for the pair for the remainder of the month.

Please contact the trading department to agree rates of exchange and also to structure market orders.

Sterling wise, it’s more of the same. A mixture of ‘good’ and ‘bad’ data with productivity up although the labour market is still struggling. This offset is going to continue that will see Sterling relatively directionless. December is when we’ll see either a move to the upside for GBP or a sharp fall. Will the UK settle the ‘divorce bill’ with the EU? If so, what will the final number be? Will the markets take this as a positive or a negative? If you have GBP exposure please make sure you have a plan in place going into December.

Prior to December the main event surrounding Sterling is the Autumn Budget Statement which is out on Wednesday. Will we see the Chancellor, Philip Hammond, increase public spending? Does the market take this as a positive or negative with the long held plan of cutting the deficit and ‘balancing the books’ a key goal? The Chancellor is rather hemmed in on most fronts so he’ll need to pull a colony of rabbits out of his hat to keep Sterling moving upwards.

On Sterling/Dollar, Donald Trump and US tax reform is stopping any sustained Dollar momentum. This has resulted in Cable (GBP/USD) moving through 1.32 the figure. As mentioned numerous times before, I expect Sterling/Dollar to finish the year around 1.32. If you can achieve above this level purchasing USD from Sterling I would look to lock some in. One less headache before the horror of Christmas shopping is upon us. 1.33 is toppish on Cable (GBP/USD) I feel with a few challenges of the 1.3320 level in the past. I don’t see us pushing much higher than this.

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

GBPUSD 20-11-2017.png

I expect GBP/USD to resume a slight downside bias in upcoming trade so if you are holding USD consider implementing market orders at 1.32 this week. Please contact the trading department to implement this.

This week, data wise, our friends across the pond are tucking into Turkey and pumpkin pie for Thanksgiving on Thursday so it will be a relatively light calendar in the US this week. We have the FOMC meeting on Wednesday although that will be a non-event.

We have inflation report hearings out of the UK on Tuesday although I don’t expect any revelatory information. We are currently at 3% on inflation and whilst we might see a small tick higher I don’t see us pushing much further. We have GDP (YoY) and (QoQ) (Q3) released and expectations are for prints of 1.5% and 0.4% respectively.

December may prove to be the month that sets the tone for Q1 ‘18 with Brexit negotiations seemingly coming to a head. Please make sure you have discussed your strategy with us and also forward contracts going into next year to take risk off the table before you get stuck into the mince pies.

Any questions in the interim please do let me know.

Have a fantastic week.

Written by Liam Alexander       

ACM Update Tuesday 14th November

Brexit seems broken and the markets have finally woken up to the fact that Mrs May might not be able to keep her job, never mind bring home the bacon when it comes to the EU summit in December. Now I don’t know about you but I’m no vegan and when EU chief negotiator Michel Barnier suggests that we will have nowhere to put our Christmas cards if Mrs May’s cabinet collapses as hard as the negotiations, its not Bungling Boris or Environment Minister Michael “Et tu!?” Gove that I am looking towards for a rescue.

UK property prices are on their way down and according to credit card company Visa, British shoppers are being nifty and thrifty as we head towards the inevitable festive period evidencing the fifth fall in spending over the past six months, plunging 0.9% m/m and 2% y/y). Pay increases, where they even exist, cannot keep pace with inflation, which is higher mostly due to the weaker pound. The only good news about any of this for the UK is that if we have no Brussels we might have no brussels by Christmas.

 

GBP/USD

Cable is trading at 1.3090 at the time of writing, down from a high of 1.3180, which is already below the close at 1.3190. It had reached 1.3080 earlier in the day. 1.3080 still remains a line of support before 1.3030, which is the bottom of the range. Resistance is at 1.3180 and 1.3220.

On Wednesday this week UK Unemployment Rate and average earnings are released and the US gives Retail Sales and CPI for October. Thursday sees UK Retail Sales announced but market commentary has suggested that in the UK we could be looking down the barrel of relatively poor pre-Christmas sales.

 The slow pace of the weak and wobbly Brexit negotiations joins the slowing pace of the economy for the UK. While the US has their own troubles, the pound remains under increasing pressure. Clients with USD requirements might wish to take advantage of the recent moves by securing funds with a series of spot and forward contracts. 

GBP/USD movement can be seen on the graph below:

GBP/USD 1 Week

 

GBP/EUR

Tuesday will see the UK publishing RPI, CPI & PPI reports for October and the EU (and German) showing off their GDP for Q3. The President of the ECB is hosting a conference at the Bank’s base in Frankfurt. This particular event is a panel that also consists of other heavyweights: Fed Chair Yellen, BOJ Governor Kuroda and BOE Governor Carney. Any comments about their common problem, inflation will be eyed as hints about the next moves.

The pair is currently holding around the 1.1233 support. A clean break below this level could be indicative of a move lower to 1.1050. Short term there is a lot more for the UK to worry about than the EUR as the markets seem not to care too much about what happens in Europe. Clients selling GBP may want to hedge further downside risks by securing funds on spot or forward contracts after tomorrow.

GBP/EUR movement can be seen on the graph below:

GBP/EUR 1 Week

 

EUR/USD

This pair managed to tick up amid unremarkable data from Europe and some weakness in the US dollar. German factory orders beat expectations while industrial output dropped by more than had been anticipated. The EC’s forecasts were upgraded and Eurozone optimism remains strong, as if there really is “Nothing to see here!” in Catalonia. How can our European cousins be so cheerful? Well, the most basic fundamental they can rely on is a trade balance surplus driven by German exports. This means that when nothing happens, the single currency is bid and rises.

During this week, the pair also enjoyed the USD’s relative weakness, amid reports of a delay in the tax reform, Glorious Leaders Donald Trump and Kim Jong Un engaging in a thinly veiled exchange of insults that would have both of them thrown out of a weight watchers anger management meeting, Trump’s capitulations in his speech to the Chinese Secretariat and another cosy conversation with Putin at the ASEAN summit. GDP data could provide a “shot in the arm” to the EUR, as growth remains positive. The USD has already made its strides and political issues may pressure it beyond its ability to weather the storm.

Euro movement against the Dollar can be seen on the graph below:

EUR/USD 1 Week

 

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, 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 check on my potatoes and count my blessings. Have a great week.

 

Written by Damien Lipman

 

ACM Update Tuesday 7th November 2017

Remember, remember the fifth of November

Gunpowder, treason and plot

Then on the Seventh of November the BBC makes salacious attempts to undermine our monarch, amongst others, in suggesting the leaked “Paradise Papers” intimated some kind of nefarious activity in relation to offshore trusts and taxation. It is crucial that we point out that there is “no evidence” of any wrongdoing. In relation to the BBC…

I see no reason why gunpowder treason

Should ever be forgot….

….except that actually Guy Fawkes was an old boy from my school in York and by and large, at least locally, he is believed to have been framed. Now I can hear you scoff at the very idea but even that is no more explicable than the Bank of England voting 7-2 to increase its interest rate from 0.25% to 0.5%, to then have GBP value take an unexpected nose dive. The minority two members of the Court of Directors, who voted to keep rates on hold, believe that wage growth in the UK was/is too weak to justify a rate hike. Whilst that view was reflected by many economists, especially after the event, it was not the result predicted by market commentators. Overall, the hike was too dovish to keep the pound at the recent highs.

Guy Fawkes, Guy Fawkes, 'twas his intent

To blow up the King and the Parliament

UK production figures are due on Friday this week. If the data beats expectations this should provide some support for GBP. Overall, there is a lack of key data out of the US and Eurozone so this may provide little direction for USD and EUR.

GBP/USD

In the US, the Fed voted unanimously to keep their interest rate on hold at 1.25%, in line with expectations but with the door left wide open for a third rate hike in December, there is very strong support for this to be expected.

The US created 261,000 new jobs in October and whilst a strong rebound was anticipated following the two hurricanes that kept Americans away from work, the data was slightly below expectations. Non-farm payrolls for September were revised up from -33,000 to 18,000, suggesting the hurricane impact was not as damaging as once thought. The unemployment rate ticked lower to 4.1% however, earnings were also lower at 2.4%.

GBPUSD opened this week around the 1.31 mark and appears to be slowly climbing as the US opens.

GBP/USD movement can be seen on the graph below:

GBPUSD 06-11-2017.png

GBP/EUR

Three score barrels of powder below

Poor old England to overthrow

BoE Governor Mark Carney said the UK 'would be booming' if it wasn't for Brexit and continued with the bank's predictions for foreign investment in Britain was now 20% lower than they estimated in the month before the referendum. Poor old Britain indeed. He added that in the event of a bad Brexit deal, the bank would not be able to cut future interest rates because of that inflationary pressure. In the Eurozone the growth rate for Q3 came as a surprise and GDP rose to 0.6%, just below the revised 0.7% from the previous quarter but exceeding expectations. This pushed the annual rate to 2.5%, from 2.3% in comparison to Q3 last year. The unemployment rate fell below 9% for the first time since 2009, also beating forecasts. The positives were offset by disappointing inflation with CPI falling to 1.4%.

GBP/EUR movement can be seen on the graph below:

GBPEUR 06-11-2017.png

EUR/USD

Positive euro-zone growth continues and has reached 2.5% y/y in Q3 this year and unemployment rates also look good, dipping under 9%. The level of inflation is dropping once again: 1.4% in the headline and 0.9% in core CPI. Importantly the ongoing Catalan crisis has reached new lows with the jailing of most of the ousted regional government, but the markets and EUR value appear to ignore it. In the US, the Fed is set to raise rates in December, the last expected hike before Powell is due to enter his new job as Fed Chair. While the NFP report showed weak wage growth at 2.4%, the upbeat ISM Non-Manufacturing PMI kept the USD head above water after a fall off late in the week.

Euro movement against the Dollar can be seen on the graph below, giving pictorial evidence to the pair behaving like a firework that just won’t go off:

EURUSD 06-11-2017.png

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, 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 make some new “arrangements” and revise John Milton. Have a great week.

Written by Damien Lipman

ACM Update Monday 30 October 2017

This week is all about ‘Super Thursday’. For the first time in 10 years it looks like we may have a rise in interest rates. Will the Bank of England Governor, Mark Carney, follow through this time or will he disappoint the market (again)?

On balance, I think rates will be raised for the first time in 10 years by 25bps. I don’t think the BoE Governor can cry wolf again on a rate rise. It will likely be a 7-2 vote from the MPC in favour (Monetary Policy Committee). Any substantial upside move for Sterling will likely have been priced in already although it will move Sterling higher. It won’t be a unanimous vote which I think the first rate rise in a decade should be. Therein lies the rub. If the people voting on an interest rate rise can’t agree around the table then how does anyone else? If they can’t all agree, then a rate rise shouldn’t be forthcoming. I’d argue the UK economy isn’t exactly swinging from the rafters in terms of wage growth and productivity and a rate rise may damage a fragile ‘recovery’. Add in consumer debt, the small matter of inflation that is likely to climb slightly higher short term, uncertainty surrounding Brexit then you can argue we should hold off on a rate rise. However, as stated at the outset, I think the BoE will raise rates. Expect language of ‘slow’ and ‘steady’ to be the order of the day should rates move higher.

With all this uncertainty, if you have a Sterling requirement and FX exposure on either the buy or sell side please get in touch prior to Thursday.

You can view the fluctuations on GBP/EUR on the graph below –

GBPEUR 30-10-2017.png

Sterling/Euro is edging up slowly although there is no firm momentum behind the move. If you are a buyer of Euro’s from Sterling it may be worthwhile locking in some on a SPOT basis prior to Thursday. Please get in touch with the trading department for a rate of exchange. The single currency seems to have lost some of its lustre of late with EUR/USD coming off to around 1.16.

I would look at implementing market orders to take advantage on EUR/GBP and EUR/USD should there be a rebound.

Sterling/Dollar

Sterling/Dollar is struggling to gain a solid footing above 1.32. As discussed previously, we think Cable (GBP/USD) will end the year around 1.32 so I don’t see a huge change in pricing into the end of year. If you can achieve above 1.32 on GBP/USD I would take advantage at this level. We can implement a market order to execute at 1.32 for you on a GTC (Good till cancelled) basis.

If you are selling Dollars back to GBP or EUR I would take advantage of the recent moves and cover off at least a portion of your exposure on SPOT prior to Wednesday this week when we have some key data releases from the US.

The US Dollar may prove to be the strongest of the currencies going into Q1 next year with them ahead of the curve on interest rates, Q3 GDP coming in above expectations at 3% instead of the consensus estimate of 2.5%. Will GBP/USD move back below 1.30? Quite possibly. ‘Super Thursday’ in the UK will have a big say on the short-term direction as will the Federal Reserve meeting.

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

GBPUSD 30-10-2017.png

We have a fairly heavy US data calendar this week with ISM Manufacturing (PMI) (October) and the Federal Reserve Monetary Policy Statement and Interest rate decision released on Wednesday. We also have the NFP (Non-Farm Payroll) figure released  on Friday rounding off the week.

If you have any questions, please do get in touch.

Have a fantastic week.

Written by Liam Alexander

ACM Update Monday 23 October 2017

Storm Brian hit Britain and caused ‘devastation’ and ‘chaos’. Well, some wheelie bins were blown over. As usual, sensationalism is the order of the day. Brexit headlines will no doubt continue in the same vein for the rest of 2017 at least.

Deal or No deal? The Brexit tension builds like Noel Edmonds television show. It is unlikely there will be a resolution on transition terms before Christmas so Sterling is going to move up and down on the back of political commentary and point scoring.

Sterling/Euro

The ongoing Catalonia issue in the Eurozone isn’t having much of an impact on the single currency. In any case, it will be swept aside this week with market participants focusing on the ECB meeting. The ECB president, Mario Draghi, is likely to start the long awaited tapering of QE. This is a significant event and probably the most significant for the rest of 2017 in terms of market direction. Bond purchases are likely to fall from €60B to around €20-€30B Euro’s a month next year. Slow and steady she goes. That’ll shove the interest rate hike conversation in the Eurozone down the road perhaps to the following year. I expect the Euro to rise this week on the back of tapering. The single currency has been the star in FX markets this year. It has lost some of its momentum of late although it is still up 12% against the US Dollar this year. Against Sterling it has also fallen back slightly.

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

GBPEUR 23-10-2017.png

I expect GBP/EUR to tick back down below 1.10 the figure again. The challenge for the ECB is containing the surge on the single currency. Look around. Sterling isn’t hurtling upwards anytime soon. The US Dollar? Yes, it may be easier now after the Senate vote to get fiscal stimulus into the economy although I don’t see the Dollar moving significantly and quickly in an upward direction. That leaves the Euro. The Eurozone economy is performing well. Political storms have subsided for now with closer integration the theme. It is a balancing act for Mario Draghi. He doesn’t want the single currency to rise too much as this will harm European exports and put the brakes on hitting their inflation target. Personally, I think the ECB and the Eurozone can handle a stronger Euro at present and I don’t think they’ll be overly concerned on the exchange rate for now.

If you are holding Euro’s and need to convert into Sterling or US Dollar please contact the trading department to discuss SPOT rates and also the implementation of market orders. There is likely to be some sharp movements around the ECB announcement so try and take advantage of moves in your favour.

Sterling is on a see-saw at present. Moves will be dictated by Brexit related news. The inflation figure out last week came in at 3%. This should, and I say should rather than will, translate to a rise in UK interest rates at the November meeting. Whilst I think rates should, on balance, rise, I’m not 100% convinced they will. Language from the Bank of England has been more dovish of late. Retail Sales also dropped more than expected in September. Consumer debt figures will likely ramp up further going into the festive season. I’m still negative on Sterling although a rise in UK interest rates and ‘good’ news on Brexit could see Sterling rally. However, I think this rally will fade rather quickly if it materializes.

Sterling/Dollar

It’s about as subdued as Storm Brian. It doesn’t really know what it wants to do. It whips up a frenzy and breezes up above 1.32 the figure then changes direction, shakes a few trees mildly aggressively, then comes down meekly to the 1.31’s and hovers there.

You can view the movements on Storm Brian, I mean GBP/USD, on the graph below –

GBPUSD 23-10-2017.png

As discussed last week, I don’t see any huge shift out of a tight trading range on Cable (Sterling/Dollar) for the rest of 2017. If you are a USD buyer consider locking in some at current rates and achieve over 1.30 going into end of year. Please contact the trading department for a rate of exchange. Have you looked at your Q1 ’18 requirements yet? It may be worthwhile having a conversation with us to start putting a plan in place for your currency requirements. Next year is likely to be even harder to predict with us closer to the proverbial cliff edge dependent on Brexit negotiations.

If you hold USD and need to convert back to GBP get in touch and we can stagger market orders for you to the downside to take advantage of moves.

Data out this week, we have GDP (QoQ) and (YoY) (Q3) figures. These are expected to come in at 0.3% and 1.4% respectively. As mentioned earlier, the ECB meeting and press conference is the main event of the week so please make sure you have a plan in place before Thursday. Rounding off the week we have GDP figures out of the US that will move the US Dollar.

If you have any questions please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update Monday 16th October 2017

Hurricane Ophelia is likely to cause some damage this week. The UK’s negotiating team will probably do more damage in Brussels though. We’re off to break the ‘deadlock’. We’re only over a year in on talks so that’s comforting to know. Out the traps early. The lot we’re negotiating with aren’t much better.

Where is Sterling likely to go against the Euro over the remaining months of 2017?

You can view the movements on the graph below last week –

GBPEUR 16-10-2017.png

We have a heavy data calendar from the UK this week. Retail Sales, employment and inflation data, and we also have the Bank of England Governor, Mark Carney speaking. Interest rates are likely to crop up with a November rate hike of 25 bps looking extremely likely.

Sterling rallied towards the end of last week with optimism on Brexit. Really? I’m not that optimistic. Apparently there has been real signs of progress. Michel Barnier, the EU negotiator in chief, has said he’s open to a two year transition deal. Like Hurricane Ophelia, his view could change direction and course at any time. 

Will Sterling come off or rally against the Euro? We have inflation data out this week that is expected to print 3%. Some letter writing will need to be done from Mark Carney to the Chancellor, Philip Hammond. Should we see a print of 3% then this should give us a firm indication that interest rates will rise in November. This should translate into a push higher on Sterling. If you have a requirement to convert GBP into Euro please get in touch with our trading team. We can look at structuring market orders for you to take advantage of any spikes in the market. With politics back in vogue in the Eurozone, from Germany to Catalonia and Spain, the Euro may see some further pressure. Please contact us to discuss your upcoming requirements to mitigate your currency risk.

Whenever there is such a thing as a ‘sure thing’ it often turns out to be not a sure thing. Everyone is now pricing in Sterling/Euro to rocket higher. Will it? People have been saying that all year. I am still Sterling negative in the run up to Christmas. Dear lord, I mentioned Christmas. Brexit and UK politics are going to hinder Sterling. Whilst interest rates are likely to rise UK productivity figures certainly aren’t. The UK is going to be in for a period of low growth for at least another 12-24 months. Sterling is going to rally on the back of some positive data news stories although I expect the trends to be short-lived. If you are a seller of Euro’s against GBP firstly take advantage of where rates are now and lock in some on SPOT. Might Sterling/Euro move lower? Absolutely. However, lock in some now and then you give yourself a price point to work from. Please contact the trading department for a rate of exchange. We can then discuss a strategy with you for your remaining amount of exposure over the next few months.

Sterling/Dollar?

We said at the beginning of the year that we expected Cable (GBP/USD) to finish around 1.32 end of year and we maintain that forecast. The Dollar has been under a little pressure with the FOMC being slightly dovish. A December rate hike is still likely although inflation is proving a thorn in the Fed Chairpersons side. I would expect the US Dollar to strengthen slightly going into year end from current levels although not by much.

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

GBPUSD 16-10-2017.png

If you are USD buyer from Sterling cover off a significant amount at current levels. I don’t see it moving much higher. Please contact the trading department for a SPOT rate. I expect Sterling to drift lower so that will bring the Cable (GBP/USD) rate down. If you hold USD I would look at staggering market orders to the downside to take advantage of moves lower. Please contact the trading department to discuss appropriate levels to aim for.

Every week now in currency markets there are large moves rather than the small price movements we used to see. Please make sure you have a plan in place to negate these shifts. Movements of 1% are now common and that can have a significant bearing on your annual FX rate.

If you have any questions please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update Monday 9th October 2017

Prime Minister Theresa May suffered a disastrous Tory Party Conference speech last Wednesday when she was handed a “joke” P45; seemed to swallow a fly, refrained from swallowing a spider to catch the fly but did suffer a coughing fit so violent that it literally sent one of the last remaining flying F’s off the wall!

Now the writing may actually be on the wall for our Foreign Secretary and occasional author, Boris Johnston, instead of the PM. Talk of a Cabinet reshuffle can be heard around Westminster. The next round of P45’s may be no joke for GBP value which fell amid uncertainty for this UK government’s future but looks like it is making a slight comeback against USD and EUR as we get into this week. 

GBP/USD

The US jobs report on Friday was mixed. Non-farm payrolls fell by 33,000, the first decline in seven years, reflecting the effects of multiple extreme weather systems. However, this was countered by other encouraging reports such as the unemployment rate falling from 4.4% down to 4.2% and average earnings jumped by 0.4% to 2.9% surpassing expectations.

Despite the uptick in GBP value against USD today, possibly caused by the US having a public holiday today and speculators may be hoping to pick up GBP at a slight discount after a steep drop last week, we are likely to see a further push against GBP by USD as the week progresses. Tomorrow (Tuesday) morning is likely to be busy for GBP as both Manufacturing and Industrial Production figures are due for release at 0930hrs, along with trade balance figures. This will likely set conditions for how the rest of the week will progress.

GBP/USD movement can be seen on the graph below, now that the graph machine is fixed:

GBPUSD 09-10-2017.png

GBP/EUR

Whilst Theresa May might be trying to build a country that works for everyone, little was reported on what was said in relation to the policy initiatives she announced on housing, organ donation and energy prices. The Home Secretary, Amber Rudd, appeared to have to tell Bo Jo that he needed to stand and support his boss. He did as he was told in that instance but for how much longer can he hold on to his position? Perhaps only for as long as he backs off from calls for the PM’s resignation. The politically-driven GBP might take comfort from signs that Theresa May is likely to stay on as leader of the Conservative Party, at least for now.

 

The coming week is a key time for Brexit negotiations as it will be the last week of talks before the EU summit to determine whether sufficient progress has been made to move onto Phase Two. The consensus expectation is that progress will not be judged sufficient to move on but it remains to be seen how real Brexit Fatigue is and how much the market will have already priced in the outcomes.

GBP/EUR movement can be seen on the graph below:

EUR/USD

 

EUR/USD was under pressure once again, dropping for the second week in a row showing how things don’t matter until they suddenly start to matter and cause generates effect. This could be evidenced by the market recently having to digest the political events surrounding Catalonia and the continuing political stand-off. In addition, dovish comments from the ECB weighed on the common currency. In the US, data has been mostly positive. The NFP was “distorted” due to the hurricanes but still consisted of higher wages. The odds for a rate hike in December remain very high.

 

What little Euro movement there has been against the Dollar can be seen on the graph below:

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, 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. Have a great week.

Written by Damien Lipman

ACM Update Monday 2nd October 2017

Several international treasures have been lost this last week. With the passing of Hugh Heffner on one side of the Atlantic, and actress Liz “Vera Duckworth” Dawn over here in the UK, we should have known that this was going to be a tough weekend.

At home, our government is still in a quiet crisis, with PM Theresa May facing a potential leadership challenge as Foreign Minister Boris Johnson seems to be gaining momentum and undermining the PM. Concurrently Stateside, USD is on the rise on hopes that tax reform will pass but the mood in markets has generally deteriorated following violence in Catalonia and the shooting in Las Vegas which has left more than 50 dead and hundreds wounded.

GBP/USD

Weak UK manufacturing data (Purchasing Managers Index) has fallen short of expectations and GBP is finding it hard to hold onto the gains made last week against USD. UK GDP was downgraded on the annual level and other figures, such as the current account, fell short of our Chancellor’s hopes and dreams. The US dollar gained some ground on hopes for a tax reform (no matter what you think of it), among other reasons. Contrary to the UK, US GDP was upgraded and US manufacturing is showing some promise.

This week, Non-Farm Payrolls (published Friday) will be the key data for this currency pair. In the meantime, please consider taking advantage of remaining GBP value if you are buying USD. Get in touch with us to discuss reducing your exposure risk by fixing forward rates. Please be also be prepared for GBP to lose further ground as a potential rate hike by the BoE in November becomes less likely, although it is not yet beyond the realms of possibility.

GBP/EUR

Generally speaking if the same events were to occur in London and at the centre of Europe, the Euro could be expected to suffer less and right now it really is. Despite Merkle’s loosening of power in Germany there is a tangible sense of hope with a reshuffle at the finance ministry. Violence and unrest after an attempt at a referendum for independence by the Catalans is causing a drop in market confidence in Spain and that is spreading. Yet GBP has slipped against EUR. Realistically further losses can be expected this week but UK Services PMI out on Wednesday morning could possibly bring some better news and a possible boost back or temporary halt in decline.

Please mitigate further downside risk to GBP value and consider taking a view with spot trades in the short term. The longer term view is that GBP may yet still have far to fall before the year end, despite the withdrawal away from suggestions of parity by most commentators.

EUR/USD

After several months of European strength and stability (much to Theresa May’s chagrin) there now follows what I like to call “quantative queasing”. EUR has lost value against USD now and early Q4 looks to be full of political uncertainty. Chancellor Merkel has a weaker hold over Germany’s government and is even less likely now to be capable of instigating any significant reform for the Euro Zone. Weakened inflation figures may further delay QE tapering and subdue the Euro. On the other side, in the US, there are glimmers of stability and positivity which will contribute to an increase in USD relative value.

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, 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