ACM Update Tuesday 24th April 2018

The Duke and Duchess of Cambridge gave us all something to smile about yesterday as the world welcomed their third child. Sunday saw the hottest day for a London marathon since records began and Prince Harry joked about the “organised chaos”. Speaking of which, whilst the world shifted its attention from US Stormy weather last week, all eyes were on Syria and GBP looked like it was well on its way to achieve levels not seen since before the Brexit vote. This week it is a different ball game altogether and if you have kept your eye on the proverbial, you will have noticed that EUR/CHF is just a tiny fraction off the 1.200 it was at before the Swiss cut their base rate in January 2015. The painful memory still lingers.

GBP/USD

Back to organised chaos and new numbers from the UK Office of National Statistics (ONS) show government borrowing decreased by £3.5bn to £42.6bn in the past financial year. The figures surprised analysts, who had been expecting borrowing to be £2.6bn higher. The Office for Budget Responsibility, which produces official government forecasts, expects the public sector to borrow £37.1bn over the next year – around a quarter of the amount it borrowed at the peak of the financial crisis. 

GBP/USD had risen to 1.4376 last week, the highest since June 2016, only to tumble around 400 pips from that high as I type this. The key event for this week is the first release of GDP for Q1 due out on Friday. If it disappoints or misses its mark, as much of the data returned last week did, it is likely to have a further negative impact on GBP.

 No matter what happens over the next week, if you need to move GBP to USD, or currencies pegged 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 for the remaining financial year.

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

GBP/USD - 1 Week

GBP/EUR

According to the National Audit Office (NAO), Ministers said the Brexit settlement could cost Britain somewhere from £35bn to £39bn, which a report by the government’s financial watchdog labels as "reasonable", however, it suggests "relatively small changes in events" could push the cost of the settlement up. The NAO warns that the UK could pay an extra £3bn in budget contributions as well as £2.9bn more to the European Development Fund. All this amongst what appears to be the most intractable issue on the hard / soft border with Ireland. 

Please consider mitigating further downside risk to GBP value and possibly take a view with spot trades in the short term. The longer-term consensus view has moved away from GBP crashing, rather than just dropping, against its usual comparators. None the less, recent highs may be a good time to consider establishing market orders.

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

GBP/EUR - 1 Week

EUR/USD

If you were looking for some excitement in the form of volatility, then you have come to the right currency pair. The big focus for this week will be on Thursday for the ECB April meeting, although it will not release new forecasts and is unlikely to change interest rates. None the less, the press conference by Draghi is likely to influence EUR value. A focus on a potential slowdown may hurt, especially if he says it has immediate implications on monetary policy. Conversely, optimism on current growth rates may boost the EUR, preparing us for the next meeting in June, when the ECB may announce what happens after the current program, of buying EUR 30bn worth of bonds expires in September. 

EUR/USD has returned to the level last seen, briefly, at the end of February, today topping out at just over 1.221. Is there more to come? Lets be clear about this, Eurozone economies have been weighed, measured and many have been found wanting at a time when the US keeps surprising all with some positive numbers and a bearish Fed. 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 flutter on baby names.

Have a great week.

Written by Damien Lipman

ACM Update Monday 16th April 2018

Sterling/Euro continues the ascendency. Will the upward trajectory continue or will it come crashing down to earth like a Z list celebrity’s diet and career?

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

GBP/EUR 1 Week

Sterling is finally taking a break from the emotion of Brexit related headlines. This should see price action move more on economic fundamentals once again. If you have a requirement to purchase Euro’s from GBP consider locking in some of the recent gains. Please contact the trading department for a rate of exchange to cover a percentage off on a SPOT basis.

Sterling is starting to break out of a range and I see GBP/EUR pushing slightly higher in upcoming trade. As detailed last week, the EUR had strong growth in 2017 although I don’t see that momentum continuing this year. Indeed, there will likely be more of a pronounced divergence in interest rates this year as the UK and US look set to raise rates further. This could see a slight downside bias and sell off of the Euro. In upcoming trade we have a sentiment survey out of Germany this week in the form of the ZEW survey. That is expected to have a negative bias. This will likely weigh on the single currency. To this end, consider implementing market orders to the upside to take advantage of any intraday movements. Please contact the trading department to discuss technical levels.

Sterling/Dollar

Cable (GBP/USD) has broken through 1.43 the figure.

You can view the movements on the graph below – 

GBP/USD - 1 Week

Dollar weakness has dragged the pair higher after a mixed Retail Sales report out of the US today. I expect this move to the upside to continue and a break above 1.44 looks likely. If you have a requirement to purchase some USD take advantage of the recent moves and take some risk off the table. We were trading under 1.40 not so long ago. The market has largely shrugged off many of the recent geopolitical tensions. However, this could of course change dramatically dependent on how things play out in the form of airstrikes, politics and sanctions. Feel free to contact the trading department or get in touch with me directly to discuss your upcoming requirements. 

If you have a requirement to sell USD look at giving yourself a price point to work form on a SPOT basis. I do think we’re going to push higher so if you can achieve under 1.45 look at locking that in. If we start to see GBP/USD retrace then take advantage of this move with a series of market orders. If you would like a member of the trading department to get in touch with you directly please let me know.

This week we have some key data out of the UK.  To kick things off, we have employment data out of the UK on Tuesday in the form of the ILO Unemployment Rate (3M) (Feb) and the Claimant Count Change and rate (March). We have inflation data out on Wednesday in the form of Consumer Price Index (YoY) (March). Consensus is for a print of 2.6%. I don’t expect us to be far off this so any market reaction around this is likely to be limited. Sterling, I believe, will continue to move higher with talk of the Bank of England (BoE) hiking rates next month.

Q2 is now firmly underway and the FX landscape is going to shift this year. Please make sure you have a strategy in place to mitigate your currency risk. 

If you have any questions please do let me know. 

Have a fantastic week

Written by Liam Alexander

ACM Update Monday 9th April 2018

Sterling has a lustre like the manicured lawns of Augusta, Georgia at present. Will Sterling continue to climb the leaderboard in Q2 or are we destined to end up in a bunker frantically trying to hack our way out?

Sterling/Dollar

Sterling/Dollar has a slight upside bias at present. We’re starting to look toppish at current levels though after the recent move higher. We had the NFP (Non-Farm Payroll) figures released on Friday and these disappointed to the downside. Expectations were for a print of 193k although the actual number came in at 103K. Cable (GBP/USD) edged higher on the back of the release although not in emphatic fashion. Yes, the figure was disappointing for March although the longer term trend of strong growth in the US remains.

If you have a requirement to purchase USD from Sterling consider covering off a portion of your exposure on a SPOT basis at current levels. Take advantage of the recent moves in your favour. Please contact the trading department for a rate of exchange.

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

GBP/USD - 1 WEEK

Sterling/Dollar is in a range at present and we’ll either break back below 1.40 and gradually push lower or we’ll break through 1.45. I think the UK and Sterling has weathered the majority of the Brexit ‘storm’ so far rather well. The downside risks may have been overplayed. We will have moves to the downside to manage although on an annual basis I expect Cable (GBP/USD) to finish trading around 1.45/1.46. If you can achieve over 1.40 as a price point to work from I would lock this in now to take some risk off the table. We can then work out a strategy with you utilising a mix of SPOT, Forward Contracts and Market Orders to try and achieve a higher average FX rate for the year. Please feel free to get in touch directly to discuss.

Whilst the UK has its part to play the US will have a large say in the direction the Dollar takes. Whilst consumer confidence in the US is at a 14 year high, factory orders are rising, employment figures and growth are strong and I expect the Federal Reserve to raise rates in May, there are some headwinds to dollar strength. Geo politics being the main one. Whilst the Dollar remains a global safe haven a continuing protectionist outlook from the US may give rise to a sell off in the dollar. Please make sure you have a strategy in place to mitigate currency risk. Doing nothing is speculating. This year will continue to be volatile and the FX landscape can shift extremely quickly.

Sterling/Euro

We’re now trading towards the top of the recent range. It wasn’t long ago we were in the 1.11’s. If you can achieve over 1.14 purchasing EUR from GBP I would consider taking advantage of the recent price movement. Please contact the trading department to lock in a SPOT trade.

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

GBP/EUR - 1 Week

The Euro has been under pressure with EUR/USD coming off highs above 1.24 to trade in the 1.22s. Growth in the Eurozone has slowed markedly after the faster than expected pace of growth last year. Inflation remains well below the ECB (European Central Banks) target of 2%. In addition, there will be a more pronounced divergence in interest rates this year with the Bank of England and the Federal Reserve likely to raise rates. This should translate to a higher rate for both Sterling and the US Dollar against the Euro.

If you have a requirement to purchase Euros and have projections on your FX exposure for the remainder of 2018 please get in touch and we can put a plan in place to take advantage of moves in your favour.

Selling Euro’s? Decision time. Whilst we aren’t trading in the 1.11’s anymore rates are still competitive. My view is cover off some of your exposure now. There will be some dips with Brexit related news likely to weigh on Sterling from time to time so there will be opportunities to ‘average up’ your FX rate at certain times.

We have Mario Draghi, the ECB President, speaking on Wednesday. He will likely shape the direction of the Euro short term so think about covering off some of your requirements prior to this. Rounding off the week in terms of market events is the Bank of England Governor, Mark Carney, speaking on Thursday. Should there be any hawkish language surrounding rates we should see Sterling benefit from this.

If you have any questions or would like to discuss a specific topic in more detail please feel free to get in touch.

Have a fantastic week

Written by Liam Alexander

ACM Update Monday 26th March 2018

The US Dollar is wobbling like a punch drunk boxer, reeling more from political blows than economic. Sterling/Dollar has sustained the recent upside move and is testing 1.42 the figure. Will we keep this momentum or will we retrace back below 1.40? GDP Q4 data out on Wednesday from the US will give us some direction this week.

Sterling gained last week on the back of the transition deal announcement with the EU. That should give Sterling some respite from Brexit related headlines for a while. The unemployment rate also fell back to 4.3% in the UK.

Sterling is going into Q2 on the front foot.

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

GBP/USD - 1 Week

If you have a USD requirement from Sterling do consider locking in some of the recent gains at current levels on a SPOT basis or a short-dated forward contract. As we so often say, doing nothing is speculating. Take some risk off the table. Please contact the trading department for rates of exchange.

Will the UK raise rates in May? Most likely. Will Sterling move higher against the US Dollar in Q2? We are at strong levels now although I do see us moving up to 1.43 with a potential test of 1.45 in May. Whilst I would suggest covering off a portion of your exposure now to take advantage of recent moves I would also leave some room to take advantage of any further upside.

Sterling is on a fairly strong footing at the moment having had better than expected Retail Sales last week in addition to good employment figures. Consider implementing market orders at 1.43/1.44 and 1.45 for Q2. To discuss technical levels to aim for please get in touch with the trading department and they can structure these orders for you.

The US Dollar is on the back foot despite the Federal Reserve raising rates by 25bps to 1.75% last week. The outlook for the US economy is positive although there is the small matter of a potential trade war with China giving a selling bias to the Dollar at present. It looks pretty ‘Stormy’ out there for the Dollar at the moment.

If you have a USD/GBP exposure can you afford the rate to potentially challenge 1.45 the figure? Take some risk off the table and give yourself a price point to work from. We can then discuss a specific strategy for you in Q2 to manage some of the undoubted turbulence that will be played out. Feel free to contact me directly to discuss in more detail.

Sterling/Euro

We challenged the dizzying heights of 1.15 last week after a strong move to the upside.

You can view the movements on the graph below –

GBP/EUR - 1 Week

We have given up some of the gains and we’re now trading in a tight range. I don’t expect too much volatility this week heading into the Easter break as we have limited data releases.

If you need to purchase EUR from GBP lock in some of the gains. We were trading in the 1.11’s not too long ago. Is there room to push higher? We will need to see a sustained break above the 1.15 level to justify any strong upside bias. Please contact the trading department for a SPOT rate.

Selling Euro’s? Whilst historically you are still at competitive levels consider market orders around 1.1450/1.14 to take advantage of any retracement of last week’s move.

We have a fairly quiet week on the data front. Q4 GDP figures out of the US will be the release most investors and traders look for this week.

If you have any questions please do get in touch.

Have a fantastic week.

Written by Liam Alexander

ACM Update Tuesday 20th March 2018

Where do I even begin this week’s report!? We have suspected Russian involvement in the poisoning of a former spy, his daughter, a policeman and other members of the British public, just before an apparent 76% percent victory for Russia’s long serving President (and occasional Prime Minister). This is amid multiple claims of ballot fraud and irregularities from the independent election monitoring group Golos and others, but no one seems to take much notice. We have also had a revolving door to the HR department at the Whitehouse and amidst all of that the UK actually agreed with the EU on the Brexit transition period, triggering a reasonably dramatic increase in the value of GBP against both EUR and USD.

I am going to format the report slightly differently:

Question: Have you ever heard of a political risk gauge called the Geopolitical Risk Index (GPR Index)?

Answer: It is a tool that helps to make some sense of the “Not Normal” that is going on around us and is often cited by policy-makers, investors, and media as one of the key determinants of economic decisions. The GPR Index is a unit of measure to indicate the frequency of articles from leading media outlets (mostly newspapers) discussing increased tension between states, wars, terrorism and other negative events.

High GPR induces adverse effects on US employment and trade, a drop in US stock market, a decline in real activity and stock prices in other advanced economies. It brings about capital outflows from emerging economies to safe havens. Recent peaks in the GPR Index have included Isis escalation in 2014, the Paris attacks in 2015 and raised tensions due to the nuclear threat posed by North Korea in 2017. Last week the GPR Index hit its highest point since the 2003 invasion of Iraq.

This is Saxo Bank’s representation of the GPR Index, published by Ole Hansen:

I realise by now that you may be wondering what has any of this got to do with relative currency values and what you need to know in order to better time your trades and mitigate your currency risk exposure. We are getting there. Its all about who carries the most risk and how that transfers to relative value.  What has caused the spike in the GPR Index last week?

The threat of trade war.

Trade war brings huge political uncertainty and has been Trump’s favourite topic of conversation, besides seemingly shouting “You’re fired!” at almost everyone except his daughter Ivanka.  Several strategists have made the case that the asset bearing the brunt of political uncertainty, not to mention the implications of a full-blown trade war sparked by tariffs on steel and aluminium imports, is the USD. U.S. stocks enjoyed a stellar year whilst the USD, as measured by the ICE USD Index, lost 10% of its value gauged against a half-dozen rivals, including the EUR and JPY.

Could this now be prescribing USD weakness and continued decline in the coming months?

We never profess to have a crystal ball but certainly there might be a significant argument for looking at mitigating further downside risk to USD exposure.

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

GBP/USD - 1 Week

GBP/EUR

After yesterday’s pleasant surprise for GBP value increase against the EUR, Thursday will be the next main event with the EU Summit taking place. The leaders of the European Union convene to discuss various matters and Brexit leads the agenda. Will they make progress on trade, the rights of citizens, and the Irish border? Finalizing the transition deal is the key event and Ireland is high on the agenda. The UK wants to be out of the Customs Union but with no customs checks between the Republic of Ireland and Northern Ireland. This circle will be hard to square. A breakup of talks could weigh on the GBP.

On Friday we will receive the Bank of England Quarterly Bulletin. This is, frankly, likely to move the markets. Clients wanting to take advantage of the value spike for GBP may wish to consider getting in touch with us and covering requirements with spot trades for now or fixing forward rates for the near future.

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

GBP/EUR - 1 Week

EUR/USD

The pair traded in a narrow range and eventually ended the week lower once again. There is not much to be said that is positive for either side yet. EUR suffers from fears that growth has peaked while the Fed may not be as hawkish as some expect. If anything is going to make a dramatic difference over the coming week it is not an expected event.

EUR/USD movement, or the lack of it, 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 find my Terms and Conditions for Facebook. Have a great week.

Written by Damien Lipman

ACM Update Monday 12th March 2018

Sterling’s battle with the Euro continues. Whilst it isn’t quite as venomous as the frightening scenes at the Crufts dog show yesterday, there remains a battle to stamp some authority and create sustained momentum.  

Will Sterling recover some ground against the Euro this week? After hitting lows around 1.1150 we had a rebound towards the end of the week with a jump back above 1.12. We have since broken through 1.1250. You can view the moves on the graph below –

GBP/EUR - 1 Week

I expect Sterling/Euro to move back into the 1.13’s this week. The Euro remains on the backfoot after the ECB meeting where rates were kept on hold and QE remained unchanged. I expect attention to move to Sterling this week after the Italian election, German vote and ECB meeting put the Euro front and centre.

If you have a requirement to purchase Euro’s from Sterling consider placing market orders at 1.13 to take advantage of any intraday moves to the upside. Please contact a member of the trading department to implement an order. The key event this month for Sterling is the EU summit on 22nd-23rd March in Brussels. If there is no transition deal in place this will create further uncertainty. Take some risk off the table and look at covering off any positions prior to this event.

Sterling has weathered the Brexit noise relatively well recently and isn’t moved by it. Sterling is being largely traded on economic realities at present. Is the UK economy swinging from the rafters compared to other EU economies? No. Is the UK economy improving? Yes. Will Philip Hammond, the Chancellor of the Exchequer, say anything riveting or implement any new policies tomorrow? Unlikely. What he will communicate is that productivity and public finances have improved with borrowing less than expected for the fiscal year. I expect a short-term bounce in GBP tomorrow. Please contact the trading department to discuss technical levels should you have a requirement for Euro’s from Sterling.

If you need to convert Euro’s back to Sterling consider covering off a large proportion of your requirements at current levels on SPOT. We have traded over 1.14 recently so if you can achieve anything around or under 1.13 I would consider this a good level to secure. Might we fall further? Yes. However, look at things on a historical basis. Trading at 1.20/0.833 – 1.25/0.80 on GBP/EUR or the inverse EUR/GBP used to be considered ‘fair value’.  

Please contact the trading department to discuss your individual requirements.

Sterling/Dollar

I expect Cable (GBP/USD) to push back above 1.40 the figure. If you are holding USD and need Sterling look at securing at current levels. Today there isn’t much data out so I expect trading to be range bound. Please contact the trading department for pricing. We had the NFP (Non-Farm Payroll) figure released on Friday that massively smashed expectations of a forecast of 200K with a print of 313K. However, the Dollar didn’t gain too much impetus with some of the details within the report on wage growth raising some questions around inflation.

Please do consider utilising market orders to execute at 1.40 if you have some upcoming USD requirements from GBP. Should we break through this psychological level then we can discuss ‘averaging up’ your FX rate in Q2.

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

GBP/USD - 1 Week

If you have any questions please feel free to contact me directly.

Have a fantastic week.

Written by Liam Alexander

ACM Update Monday 5th March 2018

Sterling took a bit of a beating last week on Brexit related news. Sterling/Euro declined and printed under 1.12. However, politics in Europe may come to Sterling’s rescue this week. Arsene Wenger may not be so lucky.

Brexit chatter is likely to take a breath with Europe being the markets focus as well as President Trump. Merkel begins her fourth term as German Chancellor after near 6 months of uncertainty. The Italians went to the polls yesterday and a hung parliament was announced. The populist movement continues it seems. This has led to the Euro being on the backfoot. EUR/USD is trading under 1.23 the figure. President Trump has announced tariffs on steel and aluminum imports so expect the phrase ‘trade wars’ to dominate headlines this week.

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

GBP/EUR - 1 Week

The main event for the Euro this week will be the ECB meeting on Thursday. Headlines will be on Italy although this will have limited impact until the dust settles and alliances are formed. Mario Draghi, the ECB President, is likely to signal that easing will continue for the foreseeable future. Inflation is running below target and the ongoing strength of the Euro isn’t helping. Interest rates will be kept on hold so the press conference will be the focus on Thursday. Are the ECB happy with the current strength of the Euro? Will they look to talk it down? I expect the Euro to come under some pressure this week.

If you are holding GBP and need to convert into Euro please contact the trading department to implement market orders. I expect a move higher so make sure you have discussed technical levels with the trading team to achieve the best rate at the best possible time. 

We have had Markit Services PMI (Feb) out of the UK this morning with a print of 54.5 against a consensus estimate of 53.3. Sterling has had a jump on the back of the release. Out of the UK this week we have MPC member Andrew Haldane speaking so any comments around Brexit may shift Sterling. Please make sure you have a strategy in place this week to protect against any adverse movements.

Sterling/Dollar

We have moved back below 1.40. 

You can view movements on the graph below –

GBP/USD 1 Week

If you hold USD you should consider locking in a significant amount of GBP at current levels. Might we move lower? Possibly. However, we have been over 1.42 in recent trade so I would look at taking advantage of the retracement lower. Please contact the trading department for a SPOT rate or to lock in some GBP on a Forward Contract.

Cable (GBP/USD) is likely to have a short-term rebound so as detailed above consider acting on converting USD/GBP before we move higher. Sterling has ticked higher on the back of PMI figures out this morning already. Might we move back to 1.40 the figure this week? Quite possibly. We have a number of data releases out of the US this week on top of Donald Trump ‘making America great again’ by instigating a potential international trade war. The main release for the US Dollar will be the NFP (Non-Farm payroll) figure on Friday. Consensus estimates for the figure is for 200K. Anything above this figure may give the Dollar a further shot in the arm. Anything below this number and we may see the Dollar lose ground. Please make sure you have a strategy in place for this week to mitigate your currency risk.

Any questions please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update Wednesday 28th February 2018

Please allow me the opportunity to apologise for the fact that this report is a little later than usual… Mia culpa! I don’t know if you have noticed but apparently its snowing and we have all been hit by the “Beast from the East”. That’s my story and I’m sticking to it. The Slipstream wind and weather system has carried out a “crazy Ivan” manoeuvre and now we are suffering some of the worst temperature drops in recent history. Of course, the currency hobbits here at ACM have remained stoic in the face of the chilly onslaught. Its too cold to type in the Sales Team igloo so I will keep this brief.

GBP/USD

Last week we discovered that the UK suffered an increase in unemployment during Q4 2017 but wages (not including bonuses) rose by 2.5%. This information caused GBP to suffer a fall against USD and put the wind up a few investors, fearful that an increase in unemployment could reduce the anticipated interest rate rise in May.

This week the focus came yesterday as Jerome Powell gave his first testimony to Congress on the economy and monetary policy and US GDP figures are released later. The US is currently riding high on wage growth and expectations of an increase in interest rates is calling yet again.

GBP struggled to break beyond the 1.40 level until Monday this week and looks unlikely to do anything dramatic (famous last words). A lot will also ride on Theresa May’s speech on Friday. More on that below.

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

GBP/USD - 1 Week

GBP/EUR

Our Prime Minister is set to deliver a keynote speech about the future trade relations, that her government wishes to have with the European Union on Friday, following a cosy weekend at Chequers. Generally speaking, the markets would prefer a continued membership in the Single Market and the Customs Union, but the hard-Brexiteers would prefer a looser relationship. Frankly, as one commentator put it, “Europe is skipping into a federal utopia with Macron, whereas the UK is now starting to appear a little desperate to get into bed with both China and the US. If there were some reasons to stay in the European Union, it would only be for the sake of the kids in the City. After all the acrimony of Brexit, all the romance has gone.” 

May’s speech should help clarify the direction of the government but be ready for GBP to not only move on the speech but also on the reaction by the European Union. A warm welcome would be positive while a rejection of May’s proposals would weigh on GBP value. In truth I think the reaction maybe a little flaccid from GBP.

As an interesting aside, Mark Carney, The Governor of the Bank of England, will speak at the Scottish Economics Conference in Edinburgh and his topic is cryptocurrencies. #justsaying

You may wish to consider setting EUR market orders for an anticipated down turn for GBP value on Friday. Please do not hesitate to get in touch with the team to discuss this.

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

GBP/EUR - 1 Week

EUR/USD

EUR/USD had a more moderate week, ending on lower ground. Will it continue falling or is it only a correction? A speech by Draghi and inflation figures are in the limelight. Both the IFO and ZEW German business surveys disappointed and so did Euro-zone PMIs. The forward-looking figures still point to growth though. In the US, the FOMC Meeting Minutes showed a relatively hawkish stance, boosting USD and setting the tone for the week. The greenback’s recovery continued, but the move is somewhat cautious.

EUR/USD dropped following Powells testimony. Clients looking to mitigate further downside risk may wish to consider locking in a spot rate now.

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 huskies and prep my sled. Have a great week.

Written by Damien Lipman

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 –

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 –

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 –

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 –

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 –

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 –

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 –

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 –

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 –

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:

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:

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:

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

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 –

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