Boiled egg Brexit: do you want your Brexit hard boiled or soft, with a runny yolk!? I would suggest that we try and go for something more like a Minstrel chocolate; hard on the outside but soft in the middle, but chocolate is likely to be a lot more expensive very soon. 

The Euro weakened by 0.2% against Sterling during Friday’s European trading session, despite positive data released from the Eurozone. European Trade Balance figures came in better than expected at €23.3Bn, beating July’s figure of €20Bn. The single currency ended the week trading around the 1.1090 levels against the Pound and is steady around the 1.1050 level today. 

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

GBP/EUR

If you have to buy EUR from GBP then please ask yourself if you / your budgeting can afford a further shift lower in the value of the pound!? Our suggestion is to lock in some Euro’s at current levels and give yourself a value figure to work from. Should we see any spikes on an intraday basis on the back of any improvement in data from the UK or disappointing headlines/news out of the EU, then we can look to take advantage of these upside moves through utilising a market order. Currency markets are going to prove extremely volatile for the foreseeable future. Please do not hesitate to contact us to discuss your requirements for the remainder of Q4 and we can structure a plan to help mitigate your risk and discuss a strategy.

Please do not make the mistake of thinking that we will not pass comment on the U.S., as we get nearer to the day of reckoning that will be the Presidential Election 2016 on 8th November. Two of the currencies that have the most at stake on the result; one is the Mexican Peso and other is the Russian Ruble. These two currencies can be seen as a proxy for investors’ expectations in the November election.

If Mr. Trump gets elected, that could mark the end of NAFTA, which would be detrimental to the health of Mexican manufacturing. Mr. Trump has vowed to bring back jobs from Mexico as well as the manufacturing industry. In addition to this, one of the signature policies for Mr. Trump has been the construction of a wall in the southern border along Mexico, which Mr. Trump has insisted that Mexico would pay for, despite Mexican protestations to the contrary. After Mr. Trump visited Mexico and maintained his stance, Peso dropped to almost 20 per dollar in the month of September and Mr. Trump’s rating rose. However, October has been good for the peso as it retraced loss as Mr. Trump’s rating declined. The peso is currently trading at 18.9 per USD.

Please take a look at the graph below to see the movement on Cable (GBP/USD) last week –

GBP/USD

The U.S. Deficit is up for the first time since 2009. Spending exceeded revenue by $587.4 billion in the 12 months to 30th September, compared with a $439.1 billion deficit in 2015, the Treasury Department revealed on Friday in a report released in Washington. As a share of gross GDP, the shortfall rose to 3.2% from 2.5% a year earlier, the first such increase since 2009. There may be a slowing in labour market activity and higher budget deficits could imply an increase in borrowing by the Treasury. Cable opened the week at 1.2434 and quickly touched a high of 1.2444. It was all downhill from there, as the pair plunged to a low of 1.2080, testing support at 1.2120. GBP / USD showed some improvement and closed the week at 1.2174. The figures out on the U.S. Deficit did little to improve Cable for us here in the UK, in so far as the market opened this morning at 1.21 and has remained, showing no recovery for Stirling from the recent “flash crash” and the Brexit boiled egg could push the pound below the symbolic 1.20 level this week.

If you are a USD seller do please get in touch with a member of the Aston team and we can discuss appropriate levels to aim for on a market order basis. Please consider converting some of your exposure on a SPOT basis to mitigate some of your risk and take advantage of the recent moves. We live to serve and to help you to retain more of the value in your money. Please do not hesitate to contact us for the most competitive rates of exchange.

Have a great week and please do not hesitate to contact us for any and all of your foreign currency exchange and international payment needs.

Many thanks
Damien Lipman