Green Cards given the red card!? If nothing else, 2017 is shaping up to be an interesting time to be alive. In this time of great change, with “alternative facts” being disseminated by politicians and reported by a media besieged by allegations of “fake news”, it is no surprise that people do not know where to turn for reliable information. That is where the Aston Currency Management weekly update comes to your rescue! Like a beacon shining in the darkness, we will always do our best to bring you the actual facts and our own considered opinion, evidence based in research from reputable and referenced sources.

GBP/USD

Over the pond, President Trump has given a stated aim of lowering the value of USD in an attempt to make American exports more competitive against goods from China, who have themselves already devalued their currency in 2016 and have intimated that they would not be afraid to do so again in 2017. Increasingly there are threats of trade wars developing but following Prime Minister Theresa May’s visit to the US and the court of President Trump last week, the UK is set to be back at the front of the queue. Further afield, Trump policies aimed at slowing down or reversing trade liberalisation process may trigger retaliation from some nations. Mexico is already planning its fight back.

Take away the Trump effect and interest rate expectations appear to be immune to the recent series of mixed data coming out of the U.S. economy. As Fed Fund Futures continue to highlight a 70% probability for an early summer-hike on interest rates and the dollar may remain supported throughout 2017 as the FOMC appears to be on course to further normalise monetary policy over the coming months. Then again… stay tuned to Twitter to learn more about short to medium term US economic policy.

GBPUSD struggling now to maintain the momentum that has taken it from a recent low at 1.1987 two weeks ago to 1.2528 currently. Recent GBPUSD movements can be seen here:

GBPUSD graph

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/EUR

Events in the US have diverted the attentions of many away from the biggest news in the UK last week when the UK Supreme Court ruled, by a majority of 8 to 3, against the Government’s appeal to bypass Parliament. The triggering of Article 50 will now have to be authorised by MPs. This may set back May’s plan to start the process by the end of March 2017. April fools anyone? The Government is set to push through emergency legislation which will likely be challenged by opposing MPs. The immediate effect of this ruling was to buoy GBP value which hit fresh highs and traded over 1.18 for the first time in since the first week in January.  The House of Commons will debate Article 50 bill tomorrow and Wednesday, then it goes to Committee, with final vote in Commons on 08th Feb. Then over to the House of Lords. It is reasonable to expect some significant volatility as speculative direction come from this. All of this will be just ahead of the BoE interest rate decision on February 2nd, with GBP at risk of facing near-term headwinds as the UK’s departure from the European Union clouds the outlook for growth and inflation. The Monetary Policy Committee (MPC) may continue to drop its dovish tone and reiterate that price growth will overshoot the target later in 2017 and through 2018 as U.K. consumer prices expand at the fastest pace since 2014.

U.K. consumer prices graph

After a slight rally in GBP value this morning, I cannot stress enough that not addressing your currency requirements is as great a risk as trading so please do contact one of our team to discuss how we can help mitigate downside risk exposure using fixed or variable forward contracts.

Written by Damien Lipman