Welcome to the first edition of the Regent Foreign Exchange Ltd FX Market Commentary.
The idea of the commentary is to, most importantly, help businesses and people make better decisions about how they manage their international payments. The landscape for economic, political and social news is rapidly and ever changing and our aim is to simplify all this into a digestible and understandable format for a range of people. The key is making it simple – there are a large number of commentaries that simply regurgitate information that is laden with numbers and statistics, but without any relatable information or interpretation about what it means for businesses and real people in real jobs across the UK and internationally.
If you would like to add anyone to our commentary list, please feel free to contact me directly at any time. As well, we are not in the business of clogging up in-boxes and so if you want me to remove you from our commentary list, please just let me know.
I would like to start today by creating a background to some of the important issues currently playing out across the UK and international business and market arenas, with a real emphasis on why they are important for SMEs and how these factors may affect you.
The GBPUSD continued to trade in the same direction as expected after the release form the Federal Reserve, edging closer to the 1.4800 levels not seen since April this year.
Next week we are expecting some significant data from the US, in the form of GDP figures. It’s lovely timing, isn’t it? A rate rise. Commentary about their growth prospects. A few days before Christmas and a firm measure of the US economy. Perhaps I need to get out more often, written down it sounds a little lamentable.
The overall trend still has a little USD strength left, but I’d wager that they don’t want to continue to hold a strong Dollar because:
- Emerging market growth would be hampered
- Dollar pegged markets would weaken
- It would probably dilute global demand
- US Equities wouldn’t perform well
Still not a great deal of data from the Eurozone. If we’re being picky, you could say that the Eurozone Current Account balance has shrunk a little bit. Is that important? Only a little. Generally, as a net flow of transactions, a big figure is considered a positive thing and this figure was a long way off the last number.
The trend of selling into the Dollar continues and the EUR ebbs gently against the Pound.
The same is largely true for the GBP, until next week now there is very little on the ground in terms of economic data. The trend is your friend with the Pound trading evenly and, dare I say, even somewhat predictably for now. Yielding versus the Dollar and pressing against the Euro.
Some conversations continue about the involvement of the UK in the European Union and the terms of our financial responsibility and what we receive under a possibly new deal.
That aside, it’s pretty smooth sailing today.
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