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ACM Update Wednesday 30th May 2018

Please allow me to open this week’s update by thanking you for still being here with us, for agreeing to continue to receive our musings and commentary on the currency markets. It struck me how relevant “Mama Mia”, Abba’s famous song is so relevant now in this time of Italian and Spanish tempest:

I’ve been cheated by you since you know when

So I made up my mind, it must come to an end

Look at me now, will I ever learn?

If you are reading this then you survived the GDPR deluge of emails shuffling up to you during the darkest hours and begging for you to continue to subscribe to the marketing and musings of websites and service providers you thought were long since gone. Thank you for sticking with us.

 

GBP/EUR

I don't know how but I suddenly lose control

There's a fire within my soul

Just one look and I can hear a bell ring

One more look and I forget everything, w-o-o-o-oh

This last week has been largely range bound but none the less exciting. Italy is at the centre of European attention. Remember what I wrote two weeks ago? Possibly not but we made it clear that Italy was going to be the epicentre for the next shockwaves to cross the European Union and here we are. The government’s program has been tamed but will likely result in a high deficit, which is worrying markets. The Italians do not feel that they have benefited from economic recovery and its not as if the Italian electorate enjoys the sound of silence. 

French President Emmanuel Macron has declared his support for a Cottarelli led technocratic government, saying President Mattarella had shown a “great spirit of responsibility” to “protect his country’s institutional and democratic stability”. It’s precisely this sort of statement that will anger the populists and wavering voters. The decision clearly is not democratic – the Italian President is preventing the formation of a government, which has a majority vote and a majority of seats. Protecting institutional stability will not resonate with voters who have a vague anger at “institutions” and “experts” already (does this sound familiar?). The fact it is coming from the French President, whom the Italians already see as subjugating Italian interests for those of France, will only exacerbate this further.

Spanish politics joined the list of worries. A Vote of No Confidence is tabled for Friday, and Ciudadanos say they will give Rajoy their vote, in order that they can engineer an orderly exit and new elections. The same threats to Spanish participation within the EU do not exist any thing like the same way as they do in Italy but make no mistake, we live in extraordinary times.

Mamma mia, here I go again

My my, how can I resist you?

Mamma mia, does it show again?

My my, just how much I've missed you

Yes, I've been broken hearted

Blue since the day we parted

Why, why did I ever let you go?

Mamma mia, now I really know,

My my, I could never let you go.

Spain’s opposition tabled a no-confidence motion after the ruling PP party was convicted of corruption. Euro flash PMI data came out mostly below expectations and implies that the slowdown extends well into the second quarter. The ECB Meeting Minutes reiterated the same cautious messages seen in the rate decision.

I've been angry and sad about things that you do

I can't count all the times that I've told you we're through

And when you go, when you slam the door

I think you know that you won't be away too long

Essentially it is all for the EUR to lose ground and GBP is simply treading water, still beleaguered by its own ongoing Brexit woes.

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

GBP/EUR - 1 Week

 

GBP/USD

You know that I'm not that strong.

Just one look and I can hear a bell ring

One more look and I forget everything, w-o-o-o-oh

While inflation dropped to 2.4% y/y, retail sales leaped by 1.6%, providing promises of a Spring comeback. Q1 GDP growth remained unchanged at 0.1% q/q. GBP/USD also depends on how the USD reacts as it enjoys safe haven flows. USD took advantage of fears related to global trade, in principal the US/China trade war, and the cancellation of the Kim-Trump Summit, which is itself either a masterful ballet of nuanced international relations or a pair of hippos with button related insecurities. The Fed confirmed a rate hike in June via its Meeting Minutes and whilst that will move the market it will likely be priced in when it comes.

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

GBP/USD - 1 Week

 

EUR/USD

Mamma mia, here I go again

My my, how can I resist you?

Mamma mia, does it show again?

My my, just how much I've missed you

Yes, I've been broken hearted

Blue since the day we parted

In the US, the Fed minutes showed that the Fed will allow for somewhat higher inflation, but they cemented the likely June rate hike. USD also enjoyed the risk-off sentiment that is a result of trade fears. Trump’s decision to cancel the meeting with Kim Jong-un weighed on markets but had little impact on EUR/USD. 

US ADP Non-Farm Payrolls came out at 178K in May, lower than 190K expected. In addition, the figure for April was revised down from 204K to 163K. 15 minutes later, US GDP was revised down from 2.3% to 2.2%, also worse than expected. The Personal Consumption component dropped from 1.1% to 1%. All in all, the data came out below expectations, but the US Dollar appears to have just shrugged it off.

Why, why did I ever let you go?

Mamma mia, even if I say

Bye bye, leave me now or never

G.D.P.R, it's a game we play

Bye bye doesn't mean forever

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

EUR/USD - 1 Week

 

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

Why, why did I ever let you go

Mamma mia, now I really know

My my, I could never let you go

Have a great week.

Written by Damien Lipman with an appropriate hat tip to Abba.

 

ACM Update Wednesday 23rd May 2018

Brexit has cost average UK households at least £900, according to Bank of England governor Mark Carney. The central bank governor told MPs: "Real household incomes are about £900 lower than we forecast in 2016." Economists had previously estimated UK households would be £600 worse off. Carney drew criticism for his comments, in which he said the Brexit vote has lowered UK growth by up to 2%. The latest data from the Confederation of British Industry (CBI) has reported UK factory output slid to a two-year low in May. Ultimately for the UK, complications in Brexit negotiations and a weakening economy could continue weighing on GBP value.

GBP/USD

Cable has been under the cosh for another week, struggling with local data and the renewed strength of the USD. The week features the inflation report (today), speeches by Carney and Retail Sales data, both due out tomorrow, as the key events. GB data disappointed with far less shopping than expected in March with a drop of 1.2% was recorded in retail sales. This time, a bounce worth 0.8% is on the cards. Bad weather was associated with the downfall and the first full month of Spring could reveal if the downturn was only temporary.

UK wages rose by 2.6%, only slightly worse than 2.7% expected and the Claimant Count Change showed a jump in jobless claims, another worrying sign. USD resumed its gains, using upward revisions in the retail sales report to move higher. 

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

GBP/USD - 1 Week

GBP/EUR

The ONS reports annualised inflation reads at 2.4%, below consensus expectations for a reading of 2.5%. Monthly CPI data read at 0.4%, below the 0.5% forecast. Importantly for GBP, core CPI read at 2.1%, below the 2.2% forecast. The data is a negative for GBP which has given up the healthy gain on EUR, falling from a daily best at 1.1440 to 1.1378 at the time of writing. The BoE made it clear time and again, most recently via an appearance before Parliament, that it is watching data for guidance as to when next to raise interest rates, and rising interest rates tend to benefit GBP. However, the inflation rate has fallen back from a recent high of 2.8% during late 2017 resulting in the April 2018 figure being the lowest observed since January 2017.

Add the above to the never ending misery faced by Theresa May and her Brexit negotiators permanently facing wobble worse than me on small boat and the ensuing uncertainty we think the data could point towards the BoE opting to leave interest rates unchanged for a period of time to come. 

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

GBP/EUR - 1 Week

EUR/USD

EUR/USD had another largely negative week, falling to the lowest levels in 5 months. EUR/USD bounced back after hitting the new low on Monday but is now struggling again. Will it continue falling? PMI figures and the ECB meeting minutes (tomorrow) stand out but were not available as we went to print. Italy is still the principal cause for grave concern and ultimately instability, venting value for EUR. 

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

EUR/USD - 1 Week

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

Written by Damien Lipman

 

 

 

ACM Update Wednesday 16th May 2018

Is it me or does it seem like there are very loud squawks from the hawks suggesting the world is heading towards war in the Middle East again? I’m sorry about the lack of humour this week but against all other advice and direction, including his own Secretary of Defence, Donal Trump announced his plans to withdraw from the Joint Comprehensive Plan of Action (JCPOA), also known as the Iran nuclear agreement. Trump’s newly installed national security adviser, John Bolton, wrote an article a few years ago entitled “To Stop Iran’s Bomb, Bomb Iran”. By withdrawing from the nuclear agreement, and making clear their goal of escalation, Trump and his administration seem to be creating their own excuse for doing exactly that and make no mistake, this is going to have global repercussions. 

The North Koreans have already expressed doubts on their own dealings with the US because of the “repugnance” they feel for Bolton. It is relevant to see what real effect the opening of the US embassy in Jerusalem will have. There are already heavy condemnations coming from the UN and the international community over the deaths of so many Palestinians and observers. Incredibly USD seems to be benefiting in relative value.

GBP/USD

GBP/USD suffered further losses with no help from the Bank of England who left the rates unchanged and sent a cautious message. GBP/USD dropped below 1.3500 at one point on speculation that the BOE will stay where it is for some time to come. In the US, the dollar initially continued higher but eventually began retreating after inflation came out at 2.1% y/y against 2.2% expected. Has the dollar peaked? Nope! 

The jobs report has been the primary event of the week (yesterday). UK wage numbers came out as expected: 2.6% on the headline (down from 2.8%) and 2.9% when excluding bonuses (up from 2.8%). The as-expected figures mean that real wages are finally up after inflation had eroded them for quite some time. However, this was expected. The GBP/USD dropped ahead of the publication and reached a trough at below 1.347. Yet as the numbers came out, the pair slightly recovered. In the medium term we anticipate GBP to regain recent losses as the markets price in an August rate hike by the BoE. 

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

GBP/USD - 1 Week

 

GBP/EUR

The UK's employment rate has increased to 75.6% – the highest since records began in 1971. New stats from the ONS show there were 32.34 million people in work in the first quarter of the year, 396,000 more than a year ago. The data also shows average weekly earnings increased 2.9% compared with a year earlier. Once inflation is considered, this translates as a 0.4% increase, signalling that the year-long incomes squeeze may finally be over.

The story here is that whilst UK PM May met with backbenchers on Monday and was said to admit that negotiations are at an impasse, with neither of the current options for a customs deal able to work, it is Italy that shows signs of being Europe’s real problem. Apparently, a draft copy of the contract between Five Star and La Lega allegedly includes a plan to write off EUR 250bn in debt from the ECB. Whilst a joint statement suggests that this is an old plan which has been "extensively modified", it has still further spooked the markets and EUR value has suffered. 

Please mark our words here, Italy is likely to a volcano of destabilisation at the centre of Europe. Please don’t forget that the Italians have over USD 2.338trn of sovereign debt outstanding – the highest level of debt in Europe, six times the level of Greece, and the fourth largest debt in the world after US ($14.915trn), Japan ($9.544trn) and China ($4.305trn). In Euro terms, Italian debt stands at EUR 1.966trn – above France at EUR 1.948trn and Germany at EUR 1.647trn. Take from that what you will but we think it’s a bomba a orologeria!

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

 

EUR/USD

EUR/USD fell to new 2018 lows but managed to bounce after the US Dollar suffered its own disappointing data. GDP and inflation figures stand out as German factory orders fell by 0.9% and added to the misery, while the Eurozone’s largest economy’s industrial output rose by 1%, better than expected. The data is not impressive, but at least not all doom and gloom. In the US, inflation fell short of expectations with 2.1% on Core CPI and weighed heavily on the US Dollar. Fed Chair Powell and ECB President Draghi did not provide any news.

The pair fell into oversold conditions and may stabilize for another week. The flow of disappointing euro-zone data may come to a halt. US data has not been that great recently. Possibly some consolidation is likely after the big falls but as we have seen today the (relatively) big falls are not over yet. At the point of publishing we are heading towards lows not seen since December at 1.1789.

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

EUR/USD - 1 Week

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

Written by Damien Lipman

 

 

 

ACM Update Tuesday 24th April 2018

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

GBP/USD

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

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

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

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

GBP/USD - 1 Week

GBP/EUR

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

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

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

GBP/EUR - 1 Week

EUR/USD

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

EUR/USD has returned to the level last seen, briefly, at the end of February, today topping out at just over 1.221. Is there more to come? Lets be clear about this, Eurozone economies have been weighed, measured and many have been found wanting at a time when the US keeps surprising all with some positive numbers and a bearish Fed. To plan through a strategy for EUR/USD exposure please contact your relationship manager.

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

EUR/USD - 1 Week

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

Have a great week.

Written by Damien Lipman

 

ACM Update Tuesday 20th March 2018

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

I am going to format the report slightly differently:

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

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

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

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

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

The threat of trade war.

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

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

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

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

GBP/USD - 1 Week

GBP/EUR

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

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

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

GBP/EUR - 1 Week

EUR/USD

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

EUR/USD movement, or the lack of it, can be seen on the graph below:

EUR/USD - 1 Week

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

Written by Damien Lipman

ACM Update Wednesday 28th February 2018

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

GBP/USD

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

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

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

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

GBP/USD - 1 Week

GBP/EUR

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

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

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

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

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

GBP/EUR - 1 Week

EUR/USD

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

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

 

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

EUR/USD - 1 Week

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

Written by Damien Lipman

ACM Update Tuesday 6th February 2018

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

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

GBP/USD

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

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

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

GBP/USD 1 Week

GBP/EUR

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

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

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

GBP/EUR 1 Week

EUR/USD

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

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

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

EUR/USD 1 Week

Not trading your currency is still a risk. The markets will move, volatility and relative values will vary but whatever your foreign currency exchange and international payment needs, you can rely on the team here at Aston Currency Management. Please do not hesitate to get in touch with us, we look forward to hearing from you. Now, if you will excuse me, I am going to try and catch up on the Six Nations in the hope that no reality TV people will give the game away. Have a great week.

Written by Damien Lipman

ACM Update Monday 15th January 2018

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

GBP/USD

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

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

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

GBP/USD 1 Week

GBP/EUR

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

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

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

GBP/EUR 1 Week

EUR/USD

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

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

EUR/USD 1 Week

Not trading your currency is still a risk. The markets will move, volatility and relative values will vary but whatever your foreign currency exchange and international payment needs, you can rely on the team here at Aston Currency Management. Please do not hesitate to get in touch with us, we look forward to hearing from you. Now, if you will excuse me, I am going to have a row about whether or not it is bad manners to leave a Christmas tree up.

Have a great week.

Written by Damien Lipman and Tillie Grothier

ACM Update Monday 11 December 2017

It's beginning to look a lot like Christmas

Everywhere you go…

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

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

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

With candy canes and silver lanes aglow

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

It's beginning to look a lot like Christmas

Toys in every store….

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

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

On your own front door

GBP/USD

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

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

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

GBPUSD 11-12-2017.png

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

Is the wish of Barney and Ben

Dolls that will talk and will go for a walk

Is the hope of Janice and Jen

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

GBP/EUR

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

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

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

GBPEUR 11-12-2017.png

It's beginning to look a lot like Christmas

Everywhere you go

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

The sturdy kind that doesn't mind the snow

EUR/USD

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

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

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

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

EURUSD 11-12-2017.png

It's beginning to look a lot like Christmas

Soon the bells will start

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

Right within your heart

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

Please do not hesitate to get in touch with us, we look forward to hearing from you. Now, if you will excuse me, I have to bake some mince pies and polish Rudolf’s nose. Have a great week, a very Merry Christmas and a Happy New Year from me. Liam will be back next week to round off the year. To be fair, his singing voice is a lot better than mine…. Ho! Ho! Ho!

Written by Damien Lipman

ACM Update Tuesday 14th November

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

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

 

GBP/USD

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

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

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

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

GBP/USD 1 Week

 

GBP/EUR

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

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

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

GBP/EUR 1 Week

 

EUR/USD

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

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

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

EUR/USD 1 Week

 

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

 

Written by Damien Lipman

 

ACM Update Tuesday 7th November 2017

Remember, remember the fifth of November

Gunpowder, treason and plot

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

I see no reason why gunpowder treason

Should ever be forgot….

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

Guy Fawkes, Guy Fawkes, 'twas his intent

To blow up the King and the Parliament

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

GBP/USD

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

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

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

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

GBPUSD 06-11-2017.png

GBP/EUR

Three score barrels of powder below

Poor old England to overthrow

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

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

GBPEUR 06-11-2017.png

EUR/USD

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

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

EURUSD 06-11-2017.png

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

Written by Damien Lipman

ACM Update Monday 9th October 2017

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

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

GBP/USD

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

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

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

GBPUSD 09-10-2017.png

GBP/EUR

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

 

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

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

EUR/USD

 

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

 

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

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

Written by Damien Lipman

ACM Update Monday 2nd October 2017

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

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

GBP/USD

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

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

GBP/EUR

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

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

EUR/USD

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

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

Written by Damien Lipman

 

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 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 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

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 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