ACM Update 18 September

Make no mistake, last week was nothing if not eventful both economically and politically. The thankfully averted tragedy in London was a shock for all and a poignant reminder of the hard work undertaken by our security services. At the same time we had yet another shot from the “Rocket Man” in North Korea, showing that politics really can upstage economics.

GBP continued to make very significant gains on USD up beyond 1.35 and a little more on EUR. With improvements in both the US and Europe, despite massive weather systems and Kim Jung Un’s best efforts elsewhere, EUR/USD has remained relatively steady.

GBP/USD

Inflation in the UK reported as rising by more than expected to 2.9% in August, up 0.3% from the previous month and BoE Governor Carney is on record now as being more hawkish with an interest rate hike likely “in the coming months”. This immediately surged GBP value up, up and away to 1.33. Even the sluggish pace of wage rises at 2.1% y/y and the rally from USD elsewhere, did not halt cable’s rise.

Please consider taking advantage of current GBP value if you are buying USD and get in touch with us to discuss fixing forward rates. Please contact the trading team to implement these. We have seen what can happen when the markets get over enthused by BoE hawkishness.

GBP/EUR

UK core CPI figures and the interest rate announcement holding steady pushed GBP beyond the 1.11 all the way to an apparently steady hold now at around 1.133. Last week the vote in Parliament backed the EU Withdrawal Bill which is to convert EU legislation into UK law in preparation for the exit in 2019. The realisation that a cliff edge Brexit scenario is already priced in to a great degree will cause traders to exit their bearish Sterling positions.

UK retail sales on Wednesday this week will be in focus as markets look to see how higher inflation effected consumer spending in August. If you are buying EUR from GBP this week you may wish to take advantage of the current value before announcements on Wednesday and Thursday. Please get in touch with us to mitigate your risk exposure. The longer term view is that GBP may yet still have far to fall before the year end, despite the corrections of major banks away from parity.

EUR/USD

German elections are the only foreseeable major event looking likely to bring uncertainty to the EUR for now. EUR/USD has started the week in a stable manner, around 1.1940. Resistance is clear at the round number of 1.20. Further support is at 1.1870, a level the pair fell to last week.

EUR initially ignored Draghi’s complaints about the exchange rate. EUR/USD reached new highs, flirting with 1.21. However, the momentum came out of the move, aided by a recovery of the US dollar. European data continued its upbeat trend, with employment rising by 0.4%, better than expected. However, the recovery of the USD does not necessarily spell doom for the EUR. A combination of political and geopolitical stability boosted USD value but after failing to push down EUR value last week, Mario Draghi is likely to be more cheerful now.

The big event of the week is the decision of the Federal Reserve; Yellen and her colleagues are expected to begin reducing the Fed’s balance sheet, and the focus will be on the plans for the next rate hikes. While the economic situation in Europe continues looking good, things in the US have improved as well. This includes a better political environment, hopes for a tax reform and with renewed optimism about a rate hike from the Fed, there is little to choose between them this 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 back to the paddle shop again, just in case! Have a great week.

Written by Damien Lipman

 

ACM Update 11 September 2017

Whether the weather be fine, Or whether the weather be not,

Whether the weather be cold, Or whether the weather be hot,

We'll weather the weather, Whatever the weather,

Whether we like it or not!

We take weather seriously here at Aston Currency and it is necessary to remember that our American cousins are suffering on a number of fronts, not least because today is the 16th anniversary of 9/11. Wild fires are raging across the West and the Southern States have had to bear the brunt of Harvey, the record breaking and ferocious Irma and they still have Jose and Katia to come. The devastation is incomparable and almost absolute in certain areas of the Caribbean. The only positive to draw from any of it is that the storm winds are actually clearing the smoke as they blow across the country.

In other news, there was no missile test/launch on the 69th anniversary of North Korea’s National Founding Day, as anticipated. Instead Kim Jong Un hosted a massive celebration to congratulate his nuclear scientists and technicians instead, whilst facing significantly increased sanctions and predictably suggesting his own reprisals. Clearly he was happy with his shiny peanut, despite the fact he couldn’t eat it.

GBP begins the week making gains on USD and EUR but it may not last for long.

GBP/USD

Cable has seen an embattled GBP work hard to take advantage of hints for a softer Brexit against the misery of the US’s extreme weather. Data from the UK last week reported that the trade deficit is narrowing and PMIs are on target. The upcoming week features top-tier inflation (Tuesday a.m.) and jobs indicators (Wednesday a.m.), as well as the BOE decision on Thursday for interest rates. Even with signs of an economic slowdown, there may be hints for the BOE raising rates despite the still-high inflation and the booming credit market. The Monetary Policy Committee probably prefers a higher exchange rate to lower inflation but possibly won’t accompany this desire with an interest rate increase. All of this will be followed up on Friday with the BOE Quarterly Bulletin, detailing monetary policy operations and current market conditions.

The UK economy may not be looking its best but GBP will likely remain resilient against a weaker USD caused by very bad weather, unfortunate politics and continuing uncertainty from Korea. Buying USD from Sterling? Try and take advantage of any change in the strength of GBP through utilising market orders. You can contact the trading team to implement these.

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

GBP/USD 1 Week

GBP/EUR

This week there will be focus on GBP with a deluge of data out of the UK. Inflation is expected to tick back up to 2.8%. The unemployment rate is expected to remain on hold at the historic lows of 4.4% with earnings also creeping up to 2.3% (including bonuses). On Thursday the central bank should keep policy on hold and voting is expected to show a 6-2 split in favour of keeping rates unchanged. Overall, we could see Sterling continue to edge higher this week, however, the key parliamentary vote on the Brexit bill today could cause some volatility. Parliament is expected to vote in favour of the bill but a vote against would continue to add to the uncertainty of Brexit and further undermine GBP value. Clients selling Sterling should cover a portion at the current levels with orders to the upside for the coming weeks.

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

GBP/EUR 1 Week

EUR/USD

Draghi’s comments at the ECB avoided the decision on Quantative Easing (QE) last Thursday announcing only “preliminary discussions”, meaning we are likely to now see QE tapering in October. Having blamed the strong EUR for almost everything that could go wrong for Europe but the weather, the markets were unconvinced and EUR got even stronger. With large swathes of the US either on fire or underwater, worries about the hurricanes, wildfires, the retirement of the Fed’s Vice Chairman Stanley Fischer and lower US bond yields all contributed towards depressing USD.

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 heading to the paddle store to stock up before any of you get to the proverbial creek. Have a great week.

Written by Damien Lipman

ACM Update 4 September 2017

Following a hydrogen (nuclear) bomb test underground in North Korea, US Defence Secretary General Mattis literally rattled his sabre and Trump has suggested that the United States might embargo all trade with countries that do business with North Korea. Interestingly that list includes a number of otherwise allied trading partners such as China, India, Philippines, Taiwan, France, Russia, Brazil, Mexico, Germany, Turkey, Egypt, Chile and keepers of the shiny orb Saudi Arabia. There’s not a huge amount to joke about this week but looking for positives, JPY and gold (haven assets) have rallied over the weekend and this morning…. which is nice.

In summary for today, USD has weakened against all standard basket currencies, the EUR is up and GBP is flat. This week, other than the obvious, the biggest event is likely to be the European Central Bank meeting on Thursday. 

GBP/USD

GBP/USD managed to recover on hopes for a softer Brexit and mixed movements in the US. The UK’s Services PMI (Tuesday morning) and trade balance (Friday) stand out as the two biggest data influencers in the first full week of September after the US jobs report missed expectations creating only 156,000 jobs in August compared to the 180,000 expected. The US unemployment rate pushed back up to 4.4% as the number of unemployed stood at 7.1 million. 

Markets were expecting unemployment to remain unchanged at 4.3%. A slowing labour markets and concerns over Trump will continue to dampen investor’s hopes of a US interest rate rise in December so you have a case of Tweedle Dee and Tweedle Dum to keep USD and GBP relatively range bound.

The slow pace of the weak and wobbly Brexit negotiations joins the slow pace of the economy for the UK. While the US economy has its own troubles, the pound remains under immense 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/EUR

The only good bit of news coming out of the UK this week that might overshadow the terrible cricket results is that The Duke and Duchess of Cambridge are expecting their third child and heir to the throne. It is unlikely to be enough to prevent further losses for GBP against EUR.

The EUR uptrend is largely justified as the euro-zone largely enjoys stable politics, a central bank that is moving towards the exits (even if gradually) and robust growth. The UK is suffering from continuing Brexit woes and the Commons is set to debate the government's Brexit repeal bill on Thursday which can only lead to greater uncertainty. On that, I am uncertain if it if possible to reach peak uncertainty or if it is a circular concept where one can be so uncertain that there evolves other certainties….. anyway, the US suffers from bad politics, slowing growth and a central bank that is hesitating as well so it will be hard for Draghi to convince us that he is dovish when everything seems to be on the right track for the EUR.

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 04-09-2017.png

EUR/USD

The Jackson Hole Symposium pushed EUR/USD higher ultimately making a short-lived breakthrough above 1.20. Reports that the ECB does not like the current strength of the currency outweighed higher inflation in the euro-zone. The downfall was also driven by a stronger US dollar. Apart from a necessary correction, USD enjoyed positive economic data: GDP growth came out at the robust level of 3% and other data was also supportive.

Thursday is a big deal with expectations of the ECB possibly announcing the tapering of Quantative Easing and if so, by how much? These are the open questions that keep EUR/USD on the edge. We know that the ECB will decide something this autumn because of ECB President Mario Draghi’s previous statements. The bond-buying scheme currently consists of EUR60bn euros per month until the end of 2017 and the big question is for the future of the program in early 2018. Will they make another reduction of EUR20bn but continue the program for longer? Or will they reduce the scale on a monthly basis and end it soon? The ECB could also delay the decision to the October meeting, but making a decision now makes more sense.

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

EURUSD 04-09-2017.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 build a nuclear winter proof ark. Have a great week.

 

Written by Damien Lipman

 

ACM Update 29 August 2017

EUR/USD has broken through the psychological level of 1.20 the figure. Does the Euro juggernaut continue climbing higher? Or will the single currency eventually get outmaneuvered by the US Dollar and brought down to earth like Conor McGregor was at the weekend?

Euro momentum continues. After speeches by the ECB president, Mario Draghi, and the Federal Reserve Chairperson, Janet Yellen, at the Jackson Hole symposium on Friday, EUR/USD broke through 1.1830 and then closed out the week a little above 1.1920. In yesterday’s trading we reached 1.1975 and in the overnight Asian session we finally broke through 1.20 the figure.

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

The move higher is a mixture of Euro strength and also Dollar weakness. I don’t see much on the horizon to change the general uptrend for the single currency against the dollar. The only saving grace will be intervention by the ECB whom determine the currency is getting too strong and talk it down. Alternatively, the US sorts itself out with regard to the upcoming debt ceiling and tax reform issues that will likely give the dollar some impetus. For now, expect the Euro to continue to strengthen. Mario Draghi had an opportunity last week to talk down the Euro and didn’t. I think the ECB are comfortable with the strength of the currency for the first time in a long time. Political risk may come back into the fray now the summer is coming to an end although for now expect further Euro strength.

If you have a requirement to convert Euro’s into US Dollars take advantage of the recent move higher. Please contact the trading department to lock in a rate of exchange. We are at 2 ½ year highs on EUR/USD.

Sterling/Euro

What does this Euro momentum mean for Sterling/Euro? It is tin hat time for GBP/EUR. Do I see anything on the horizon that will dramatically alter the trend lower? At this point, no. Is Parity on Sterling/Euro now a possibility? Yes. If you are a Euro buyer from Sterling you need to start preparing for this whether it materialises or not. Please contact the trading department to discuss your individual requirements. It might not happen but as I’m sure you’re tired of me saying, ‘doing nothing is speculating’. As discussed in previous reports I expected Euro to be the golden child of markets and I don’t see this ending at present. On Sterling, I remain negative. We have inflation report hearings out of the UK on Wednesday. Economic data will prove important although politics, posturing and positioning by the UK Government will likely determine Sterling direction. The UK Government need to play a winning hand at the table on negotiations soon or we’re going to see Sterling fall further.

We have inflation data out of the Eurozone in the form of preliminary CPI (YoY) and (MoM) and employment data out of Germany on Thursday. Other than these releases we are relatively data light from Europe this week.

If you hold Euro’s and need to convert into GBP consider covering off a substantial amount of your exposure at current levels. Please contact the trading department for a SPOT price and to implement market orders for any further moves lower.

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

Sterling/US Dollar

Will we break through 1.30 the figure or pullback from current levels if the US resolves the debt ceiling and tax reform issues?

If you’re a buyer of USD from GBP consider market orders at 1.30. Please contact the trading department to implement these. As mentioned in previous reports I don’t see huge variance in Cable (GBP/USD) to the end of the year. I think we’re toppish at 1.33 so if you can achieve 1.30 to buy USD I would look at covering off a sizeable portion of your exposure to de-risk things to the end of the year. The trading department can provide you pricing on Forward contracts out till end of December 2017.

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

If you have a requirement to sell USD back to GBP then look to stagger market orders to the downside. I would expect a reversal of the recent move higher with some Sterling weakness to come. We also have some important data out of the US this week in the form of employment data and the NFP (Non-Farm payroll report) that is released on Friday.

The summer and sangria is about to end for another year. Liquidity, traders and investors will be fully back to the table from next week. Expect market movements, German elections, UK/EU negotiations, the Conservative party conference, debt ceiling and tax reform issues in the US, North Korea, safe havens, and monetary normalisation all to play a substantial part from September onwards in currency markets. These events and issues will all lead to volatility. Make sure you have a plan in place and have spoken with a member of the Aston team to implement a strategy to de-risk your position and take advantage of any moves higher in your favour.

If you have any questions on the above please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update 21 August 2017

“When will I, will I, be famous”. Yep, the 80’s band Bros has made a comeback folks. We have the Jackson Hole Symposium this week in Wyoming where the ECB President, Mario Draghi, will be the star of the show. Perhaps Draghi will respond to questions on the value of the Euro and monetary normalisation with a mixture of evasive guile using the following lyrics from the aforementioned hit “I can’t answer that, I can’t answer that”.

Sterling/Euro

We have traded under 1.0950 on Sterling/Euro. A seven year low. Do you hold Euros? If so, lock in 50% of your exposure back to Sterling on SPOT this week. Why? Firstly, it de-risks your position and you can then take a view on the remaining 50% next week. The two questions I alluded to above will come into focus this week. The value and strength of the single currency and a word that is going to be used more and more in the coming months; normalisation.

Is the Euro overvalued or undervalued against Sterling and the US Dollar? Largely, this is going to be down to Mario Draghi, the ECB president, to determine when he speaks on Friday. Does he think that the Euro’s 10% gain against the Dollar is overdone and is likely to be a drag on inflation and thus damage exports? Damaging exports will then scale back growth in the Eurozone. If growth is scaled back then the case for not tapering QE remains. I don’t think he will hint that the Euro is too strong this week. I expect the Euro to get another shot in the arm and drive higher. Why? The Eurozone strength is now at a stage where they have to join the party the Federal Reserve started and commence scaling back the life support that QE (Quantitative easing) provided during the financial crisis. I expect a tapering of the €60B monthly bond purchases in the coming months. It is a huge balancing act for Mario Draghi and he has to get the timing right. I believe they will look at the picture and determine now is the time to act. That’s why I think the probability of Sterling/Euro hitting parity is a lot higher than perhaps the market has priced in yet.

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

GBP/EUR 1 Week

I expect Euro strength to continue as briefly opined above. We have a fairly light week in terms of data with the ZEW Survey (sentiment) released on Tuesday being one of note. Other than that expect the end of the week and Draghi to drive the next move in markets.

The case for Sterling rising like the recent price of salmon? Not a strong one. Yes, the unemployment rate fell, and wages surprised by coming in at 2.1% and exports are rising due to the weakness of Sterling, However, wages aren’t rising in line with inflation and I don’t expect them to catch up anytime soon. This is going to lead to more consumers seeking credit from Banks, which is now hitting worrying levels. I expect things to get slightly worse before they improve for the UK. I expect grown up thinking to prevail and the UK and EU will end up with some form of a transition arrangement.

However, short-term I expect Sterling to suffer further.

If you have a requirement to purchase Euros from Sterling I would consider locking in some at current levels to protect yourself from further pain. Please contact the trading department or me directly for rates of exchange and levels to aim for.

Sterling/Dollar

As suggested a couple of weeks back I expected Cable (GBP/USD) to rally from 1.30 the figure to around 1.32 with 1.33 being toppish. I expected a retracement from these levels and so it has proved. Sterling/Dollar has continued the downside move and is now trading in the mid-1.28s. As discussed previously, I don’t see Sterling/Dollar moving hugely higher this year. If you can achieve 1.30 to purchase US Dollars I would lock in a 3-6 month forward. Please get in touch and we can structure this for you.

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

GBP/USD 1 Week

If you are a seller of USD back to GBP and can lock in under 1.30 start to aggregate your FX rate from that point and look to improve your rate over the coming months. You can do this by utilising market orders at certain price points. Our trading department can provide you with technical indicators and levels that will give you the best opportunity to achieve the best rate at the best possible time.

The main data of note out of the UK this week that is likely to move Sterling is the Inflation Report Hearings out on Wednesday and the second Q2 GDP estimate. If you have Sterling exposure make sure you have a strategy in place prior to Wednesday to mitigate your risk.

The US Dollar and Federal Reserve is playing second fiddle to the Euro and the ECB at present. With politics and economics more entwined than ever this can change extremely quickly.

Make sure you have had a discussion with us to implement a plan for your FX requirements.

Any questions let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update 14 August 2017

Sterling/Euro has broken through 1.10. The move has happened a few weeks ahead of my forecast of the end of August. Where now for GBP/EUR? 1.05? Parity? Below parity? It will be as interesting to see as Jacob Rees ‘Moggster’ Mogg as PM.

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

EUR/USD is battling with the 1.18 level. I think it is a matter of time before we push through the psychological level of 1.20. I don’t see anything that will hold back the Euro at present. Should we see the move in EUR/USD this is going to impact Sterling/Euro to the downside. I have been Sterling negative for most of this year and I don’t see anything on the horizon to alter this view. We have inflation data out of the UK tomorrow in the form of CPI (YoY) (Jul). Consensus estimate is for a print of 2.7% against the previous figure of 2.6%. I expect this figure to come in on expectations tomorrow. We will see a gradual run up in inflation to the 3% mark this year. Wage growth, or the lack of it, will continue to be a thorn in the side for people. With inflation rising this is going to have consumers reining in their spending. Alarm bells are already starting to ring on borrowing levels and credit. With ‘Brexit’ only just beginning in earnest then Sterling is going to suffer. I think we can wave goodbye to any talk of an interest rate rise in 2017 now.

So, what should you do if you’re a buyer of Euros from Sterling? We can all sit here and say GBP/EUR should be trading higher. It isn’t. The giddy heights of 1.18 seem a distant memory. 1.40 on Sterling/Euro seems like a previous century. We have seen a slide where we are now discussing parity as a distinct possibility. Can you afford to trade at 1:1? Has parity ever happened before? No. I have never thought parity was a realistic level. However, I think the case for parity is now a salient one.

If you have requirements to purchase Euro’s please contact the Trading department or speak with me directly. We will put a strategy in place for you over the coming months to de-risk your position. Could we see some sharp upside intraday movements on the back of positive data releases this week for Sterling? Possibly. It may be worthwhile implementing a market order to take advantage of spikes higher. Should these upside movements occur I don’t think they’ll hang around for too long. If you have a market order in place with us your trade will be executed automatically for you should your rate be achieved. Please contact myself or the Trading department to discuss appropriate levels to aim for.

Are you holding Euro’s at present? Take advantage of the current levels on a SPOT basis or lock in a sizeable portion on a 3 month forward back to Sterling. I do think the rate will move further in your favour although take some risk off the table and lock in a sizeable amount now. Please contact the Trading department to discuss. There are quite a few data releases that may move the Euro this week. We have preliminary GDP (QoQ) and (YoY) (Q2) released with inflation data out in the form of CPI (YoY) (Jul). We also have the ECB Monetary Policy Meeting Accounts release.

 

Sterling/Dollar

We are hovering around 1.30 the figure without any clear direction at present. Last week Sterling/Dollar traded in its tightest range for three years.

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

 

We have more data releases this week so I expect some volatility to return. traders and investors should be coming back to the party after a few weeks away. This week we have Retail Sales (MoM) (Jul) out of the US in addition to the FOMC (Federal Open Market Committee) minutes on Wednesday evening (UK time). With Geopolitical tensions showing no signs of abating with North Korea still being, well, North Korea, the dollar is likely to fluctuate. Sterling has come off the highs of around 1.32 in recent weeks and I would expect a move back to the 1.28s in upcoming trade. If you are a USD buyer from Sterling do consider locking in some of your exposure at current levels. Please contact me or the Trading department for a rate of exchange.

If you hold USD consider market orders to the downside to take advantage of any Sterling weakness.

September is starting to come into focus and the lull of August will soon be a distant memory. Make sure you have discussed a strategy for the remainder of the year with us. Movements will likely be a lot more severe from September through to the end of the year.

Any questions please do let me know.

Have a fantastic week.

Written by Liam Alexander

 

ACM Update 7 August 2017

Sterling has crashed into rocks like the ship in Shakespeare’s Twelfth Night. Will the themes of confusion and tragic comedy apply to Sterling for the rest of the year? Or will Sterling get a performance enhancing ‘boost’ like Justin Gatlin has had over the years?

Sterling/Euro

I forecasted Sterling/Euro being under 1.10 by the end of August. I don’t see anything over the coming weeks to change my forecast. Indeed, we may get there sooner than the end of the month. The move in GBP/EUR has largely been down to Euro strength. However, I think we’re due a bout of Sterling weakness that will likely drag the pair lower. If the EUR/USD pair can consolidate above 1.18 the figure and indeed break through 1.19 with a rally to the psychological level of 1.20 then we’ll see GBP/EUR under 1.10 sooner than the end of August.

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

GBP/EUR 1 Week

Why do I think Sterling is going to be on the ropes? I can’t answer this question without mentioning ‘Brexit’. I think it is fairly obvious to everyone by now that ‘Brexit’ is causing economic uncertainty. I think we can park the ‘Brexit’ conversation until October where I see this becoming front and centre again. We have the Conservative Party conference on the 1st of October with Brexit negotiations on the 9th October. Until then markets will be focusing more on economic fundamentals.

Tomorrow is a decade since the start of the financial crisis. Is the UK walking into another one? I don’t believe so. However, there are a few warning signs that may weigh on Sterling. Wage growth is stagnant and going backwards. On Wednesday we have UK inflation Report Hearings out of the UK. What is likely to be reported? As discussed earlier in the year I expect UK inflation to hit 3% this year. A full percentage point above the target rate. This translates to the man in the street having less money in his pocket whilst wages aren’t going anywhere. With costs rising more people are borrowing. Consumer debt is climbing higher with the amount of people paying for things on credit increasing. Indeed, the ratings agency Moody’s downgraded a large portion of UK Consumer debt last week.

To add to the aforementioned points we had a relatively lacklustre Bank of England meeting. As expected rates were left at 0.25% and the bond buying program remained at £435 billion. Growth forecasts were revised lower with the UK sluggishly crawling along. Growth is expected at 1.7% this year. I expect this to be revised lower still. Do I see any upside for Sterling this month? Nope. The only move higher likely on GBP/EUR will be down to a scale back of market long positions on the single currency. There are no real events this month with most investors and traders sitting on a beach sipping Pina coladas or Strawberry Daquiri’s.

If you are a EUR buyer from Sterling consider locking in some of your exposure. If you can stay above 1.10 over the summer months I would consider this a good level to achieve. Should GBP/EUR be higher than it is currently trading at? Absolutely. However, the Single Currency is currently the darling of the market so until we see her elbowed out of the picture then pressure is going to remain to the downside. Please contact me or the trading department for a rate of exchange.

If you are converting Euro’s back into Sterling lock in the majority of your exposure at these levels. Don’t get greedy. I do believe we will go below 1.10 although due to the lack of grown ups in charge around the world anything can happen. Take advantage of the moves. On your remaining amount of exposure consider implementing market orders. Contact the trading department to discuss appropriate levels to aim for.

Sterling/Dollar

Where are we going? We dropped off from levels above 1.32 after the release of the NFP (Non-Farm Payroll) figure. We’re trading above 1.30 without any clear direction either way at present.

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

GBP/USD 1 Week

Non-Farm Payrolls came in above expectations at 209K against consensus estimates of 183K. The jobless rate fell to 4.3%. Cable (GBP/USD) fell to 5 day lows around 1.3090 on the release. Politics will continue to weigh on dollar sentiment due to the inability to get anything going from a Fiscal point of view.

Will the US raise rates this year? Will they start to reduce the Balance sheet? I’m largely Dollar neutral at present with a slight bias to the downside. I expect Cable (GBP/USD) to hang around the 1.30 level short-term. For Sterling/Dollar to drop below 1.30 the figure it will be Sterling weakness that drags it lower.

As discussed a few weeks ago, Sterling/Dollar is toppish around 1.33. We’ve challenged the mid-1.32s and we’ve now moved lower. If you are USD buyer from GBP lock in above 1.30 if you can. I don’t see Sterling/Dollar moving much higher in 2017.

If you hold USD and need to convert back to Sterling consider placing market orders at 1.30 the figure as the first point of resistance. Please do get in touch with our Trading department to discuss specific technical levels that need to be broken. They can then provide you with guidance on exact market levels to aim for over the coming weeks.

If you have any questions on any of the above please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update 31 July 2017

Game of Thrones is well and truly back on screens and The White House communications team and former Chief of Staff have undergone their own version of the Red Wedding. North Korea has launched yet another ICBM, giving it a theoretical reach across to the US mainland and Trump responds with some strongly worded Tweets, expressing further displeasure with China’s inaction. Russia has given the US notice on expelling three quarters of US diplomats, in apparent retaliation to the US Senate’s overwhelming approval for a bill to toughen sanctions on Russia (for allegedly meddling in the 2016 US presidential election and for its annexation of Crimea in 2014). Please don’t forget that in December last year, then US President Barack Obama ordered the expulsion of 35 Russian diplomats and closed two embassy summer houses in Washington that were said to have been used by Moscow for espionage.

All of the above comes under the shadow of the Republicans failing to repeal or replace the Affordable Care Act (Obama Care) which continues to raise concerns and further weakens USD value. Its all getting a bit Tom Clancy and something of a consensus has emerged in the currency markets to sell USD.

GBP/USD

In the UK, Preliminary GDP remained unchanged at 0.3%, matching the estimate. Over in the US, Advance GDP posted a strong gain in 2.6% in the second quarter, above the estimate. The headlines here are political risk continuing to rise, in no small part due to Trump’s failure to pass a healthcare bill weighed on the US dollar. The US dollar is under pressure, with mixed numbers in Q2 and worries that the Fed might not raise rates in December. Cable also moved to a 10-month-high above 1.31 but it is important to note that the recent trend has been mostly down to USD weakness rather than GBP strength. There is still strong probability that GBPUSD will fall back below 1.30 this year, especially if the Tory Cabinet “Civil War” starts to look any more messy.

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/EUR

Brexit worries continue to darken the mood of investors for GBP, as the start of negotiations between the UK and the EU has revealed wide gaps between the two sides and significant internal differences and infighting within the government but also especially Mrs May’s cabinet. None the less, Euro lost some ground following the release of PMI figures all missing expectations but still the UK economy is slowing due to exchange costs driving the cost of imports higher and the squeeze of inflation taking its toll. It all points towards the BoE not increasing interest rates this week. None the less, the BoE will publish its latest quarterly inflation report on Thursday. Any downward revisions to growth will not help GBP value next week. 

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

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

EUR/USD

The Fed kept the interest rate unchanged at 1-1.25% and USD was sold off immediately after the event and continued to decline during the Asia session. EURUSD reached close to 1.1780 last week, the highest level since January 2015. The pair opened this week above 1.17. Further support for EUR comes from the divergence in policy from the Federal Reserve and the European Central Bank for the time being, as market chatter over the likeliness of ECB ‘tapering’ in the coming months seems to have replaced the possibility of further tightening by the Fed.

The US releases Non Farm Payrolls (NFP jobs report) on Friday, crucial for USD relative value. Markets are expecting 187,000 new jobs in July. If NFP figures disappoint it is likely to lead to further USD currency losses. Average earnings will be closely monitored as the inflation level has been affected by recent sluggish wage growth. If wages don’t increase by at least 0.3% we will likely see USD drop at the end of the week, ongoing through to next. Follow the ISM manufacturing and non-manufacturing PMIs this week as good indicators of job growth and therefore the likely direction of travel for USD.

Euro movement 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. Now, if you will excuse me, winter is coming. Have a great week.

Written by Damien Lipman

ACM Update 24 July 2017

The Euro still has the wind in its sail. Sterling does not. Viewing the Sterling/Euro rate at present is painful. It is as painful as being kidnapped and made to sit in a room, watching endless episodes of Love Island, with people that fill their sentences with ‘like’ ‘literally’ and ‘basically’. Will GBP/EUR break through the psychological level to the downside of 1.10 the figure? We will see.

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

Sterling had its worst week against the single currency in nine months. Over a 2% move lower. This has largely been driven by Euro strength and thoughts that the ECB (European Central Bank) would tighten monetary policy next year. UK inflation figures also didn’t help Sterling’s cause. The release came in at 2.6% instead of the consensus estimate of 2.9% last week. This led to Sterling being sold off with the chances of a rate hike from the Bank of England looking less likely this year.

Is the Euro overbought at current levels or will we see further pressure on Sterling/Euro over the summer months? As mentioned in previous articles I am Sterling negative over the summer. The past week has done little to change my view. We may see Sterling/Euro climb a little and settle back in the 1.12-1.15 range for a while although I expect a move under 1.10 by end of August. If you have a requirement to purchase Euro’s from Sterling please do consider locking in some above 1.10. Sterling/Euro has rallied slightly this morning on the back of poor German manufacturing data. I think this will be the exception rather than the rule over the coming months. If you would like a SPOT rate please get in touch with the trading department.

Last week Mario Draghi, the ECB President, gave his press conference. Despite his dovish tone and the bond buying program remaining capped at €60 Billion and no change to interest rates investors bought the Euro. Why? The market is taking his comments with a pinch of salt. The Eurozone recovery will continue. I expect a scale back in Bond purchases from early next year even if publicly they say this hasn’t been discussed. This will likely be announced once we get the summer out the way and the word ‘tapering’ comes back into fashion at the September meeting.   

If you’re a EUR seller consider covering off a sizeable amount of your requirement back to Sterling on a SPOT basis. Again, contact the Trading department or me directly for a rate of exchange. As detailed above I see further pressure on GBP/EUR in the next 3 months. It may be worth considering market orders over the next few months. If you would like to discuss appropriate levels to target let me know.

Sterling/Dollar

On the surface Sterling/Dollar looks to be holding up rather well right? Wrong. The Market views the dollar as fundamentally bearish with it being sold off heavily against the Euro for example. We’re trading above 1.1650 on EUR/USD. With Fiscal stimulus looking more and more of a challenge for the yellow haired red tie wearing chap in the White House the Dollar has been sold off. In addition, the resignation of a key spokesman further intensified political upheaval for the US Government.

So, with all this going on and mixed data from the US Cable (GBP/USD) should be trading a lot higher. The fact Cable (GBP/USD) is trading marginally lower against the US Dollar says it all really. Sterling is not performing well. We may see a short-term bounce higher back to the 1.31-1.33 range although I then expect a number of short positions to come in with Sterling/Dollar taking a Tom Daley inspired dive off the top board.

You can view the trend lower last week in GBP/USD on the graph below –

If you are a USD buyer from GBP lock in some above 1.30. This is going to be the upper end of the range for 2017. Please contact the trading department for a SPOT rate. We may see some spikes higher on an intraday basis so we can look to structure market orders on a GTC (Good till cancelled) basis for you. If you would like to discuss levels to aim for please let me know.

What do we have out this week? From the UK we have Q2 growth figures out and also the inflation report hearings. These are due out Wednesday morning. The IMF (International Monetary Fund) has lowered UK Growth forecasts (as well as the US) so will we see a dip in figures on Wednesday? There will be Sterling volatility around these releases so make sure you have something in place to either protect yourself from movements against you or to take advantage of any moves in your favour. Adding fuel to the fire on Wednesday will be the Federal Reserve interest rate decision and policy statement. Do I expect a rate rise? Chances are practically nil. Inflation in the US is falling so will this have an effect on the Federal Reserve sending signals on the expect one more rate hike penciled in for this year? Possibly. There may be Dollar movement around this event.

There are slightly thinner markets over the summer with less liquidity so any moves can prove more dramatic than normal. Please make sure you have a plan in place for the remainder of July and into August.

Have a fantastic week and enjoy the rain soaked London summer.

Written by Liam Alexander

ACM Update 17 July 2017

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

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

You can view the movements on Sterling/Dollar below –

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

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

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

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

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

Sterling/Euro

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

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

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

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

If you have any questions please do let me know.

Have a fantastic week.

Written by Liam Alexander

ACM Update 10 July 2017

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

GBP/USD

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

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

GBP/EUR

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

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

EUR/USD

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

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

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

Written by Damien Lipman

 

ACM Update 26 June 2017

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

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

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

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

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

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

GBP/EUR 1 Week

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

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

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

Sterling/US Dollar

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

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

You can view the price movements on the graph below –

GBP/USD 1 Week

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

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

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

Any questions in the interim please do let me know.

Have a fantastic week.

 

Written by Liam Alexander.

ACM Update 26 June 2017

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

GBP/USD

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

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

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

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

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

GBP/EUR

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

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

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

EUR/USD

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

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

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

Written by Damien Lipman

ACM Update 19 June 2017

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

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

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

Sterling/Euro

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

GBP/EUR 1 Week

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

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

Sterling/Dollar

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

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

GBP/USD 1 Week

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

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

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

Any questions please do let me know.

Written by Liam Alexander

ACM Update 12 June 2017

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

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

GBP/USD

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

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

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

GBP/USD moves

GBP/EUR

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

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

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

GBP/EUR moves

EUR/USD

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

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

EUR/USD moves

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

Yours Sincerely

Damien Lipman

ACM Update 9 June 2017

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

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

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

GBP/USD GRAPH

GBP/USD GRAPH

GBP/EUR GRAPH

GBP/EUR GRAPH

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

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

Have a great weekend

Kind Regards,

Liam Alexander

ACM Update 5 June 2017

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

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

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

Market orders  

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

Sterling/Euro

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

Sterling/Euro

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

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

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

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

Please contact the Trading department for current SPOT rates.

Sterling/Dollar

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

Cable (GBP/USD)

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

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

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

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

Have a fantastic week.

Written by Liam Alexander

ACM Update 22nd may 2017

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

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

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

GBP/USD 1 Week

Sterling/Dollar

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

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

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

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

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

Sterling/Euro

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

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

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

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

GBP/EUR 1 Week

INSERT GBP/EUR GRAPH

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

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

Have a fantastic week. 

Written by Liam Alexander

ACM Update 16th May 2017

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

GBP/EUR

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

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

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

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

GBP/EUR 1 Week

GBP/USD

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

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

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

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

GBP/USD 1 Week

EUR/USD

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

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

EUR/USD 1 Week

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

Written by Damien Lipman

 

ACM Update Monday 8th May 2017

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

GBP/EUR

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

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

GBP/EUR 1 Week

GBP/USD

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

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

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

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

GBP/USD 1 Week

EUR/USD

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

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

EUR/USD 1 Week

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

Written by Damien Lipman