I am sure you read the reports last week regarding the Swiss National Bank (SNB) decision to remove the EUR/CHF floor of 1.20 that had been fixed for over three years. With the resultant carnage this caused on financial markets I am sure you will have read that some ‘currency brokers’ and companies in the UK filed for insolvency. I want to make absolutely clear that Aston Currency Management DO NOT SPECULATE and all client funds are SEGREGATED. We were not affected by the CHF move so please rest assured that Aston Currency Management will be here for a long time. You will also have to listen to my educated ramblings on currency for numerous years to come. A painful thought I know.
What has the EUR/CHF move meant in the currency market? Without boring you to tears on the specifics of the move it is the Swiss National Bank effectively saying “1. The Swiss economy is doing better than the Eurozone 2. It doesn’t make much sense to have our currency pegged to yours. 3. We think the ECB will add more stimulus on the 22nd so the EUR will weaken further. 4. Forget holding any more Euro assets. With the USD strengthening so much against the Swiss Franc it didn’t make it worthwhile to keep the 1.20 peg for EUR/CHF any longer”. So, if you’re from Germany for example buying a Toblerone just got a lot more expensive.
What did the move do to GBP/EUR? In short, it jumped up very quickly. Those of you who had market orders staggered at different levels will have achieved your desired rate. Do you have upcoming currency transactions to do? I would suggest placing market orders prior to the ECB meeting this week on Thursday 22nd January. Please contact me to place a market order.
GBP/USD? It has stabilised and is trading in a range, for the moment. I expect the downtrend to continue. Need to purchase USD? I would look to lock some in at current rates. If you would like one of the team to get in touch please let me know. Seller of Dollar into Sterling? I would use a combination of SPOT and Market Orders if converting USD into GBP. Why? Well, from around 1.70 or so you’re over 10% better off so securing some on SPOT limits any risk that GBP/USD goes up. You can place market orders at 1.5150 to execute.
If you have any questions please let me know.
Have a great week
Written by Liam Alexander