SGM-FX insights

Central Banks and Cost of Borrowing Drivers The two principal levers used by central Banks are monetary policy and the setting of interest rates and the management of their balance sheets. With a move towards tightening ie higher interest rates and the reduction in balance sheet holdings, the snag is that despite some encouraging signs […]

A big week indeed Normally the first week of any new month is relatively significant. There is typically an above average volume of data releases with the notable non-farm payrolls in the United States normally the figure analysts are looking out most closely for. February will prove to be no exception with a significant load […]

Global Trade Trends Following Covid, Lock Down, Supply Chain issues and the trade war between China and the USA, while globalisation may not have ended, it is being replaced in significant part by what some economists are naming fragmentation which is the handle given to countries moving production of goods to manufacturing centres nearer to […]

Inflation With markets as ever getting ahead of themselves by many having decided that the inflation peak is a yesterday thing, there is a dawning realisation that with the current levels of USA 6.5%, 9.2% UK and 10.4% EU as at Dec 2022, inflation is not only well above target of 2% but is still […]

Will they, won’t they It’s one week to the day until the next Bank of England decision. It will prove critical to the value of GBP and perhaps prove to be a defining feature of the currency market for at least the first quarter of this calendar year. Bank rate in the UK currently sits […]

UK Government Borrowing By Numbers Many people have a disconnect when it comes to linking government finances with their own-bring on the idea of teaching finance as part of the school curriculum-however, yesterday’s release showing the government borrowing figures fall into the category of both attention grabbing but so eye watering that many will likely […]

Canadian Clues There has been a key theme in markets emerging for several months now. It will likely continue to be the defining feature for several months if not quarters ahead. We had lived several phases of the monetary adjustment cycle that have each been so central to defining exchange rate movements in the post-pandemic […]

European Central Bank As we buckle up for the forthcoming February 2 European Central Bank meeting, ECB Board Member Klaas Knot broke cover at the weekend with the warning that at least two 50 bp rises are on the cards for February and March with more to follow in May and June, but the size […]

Bank of England Governor Bailey more optimistic about both inflation falling and also interest rates peaking at a lower level. The Delphic language normally favoured by Central Bankers was not deployed yesterday when the Governor saw no reason to correct the market in its assumption that 4.5% would be a ceiling for interest rates. Not […]

Room for new funding Despite the decision by the Bank of Japan to keep monetary policy all but unchanged, the market is still clinging to the prospect of monetary adjustment in the periods ahead. Following the initial reaction in USDJPY in the early hours of the morning, the remainder of yesterday’s trading session saw the […]

Oil Expectations of further relaxation of China’s Lock down policy evidenced by the vast numbers of people permitted to travel for the Lunar New Year celebrations were sufficient to drive up NYMEX WTI oil up to $81.20 on optimism that China is close(r) to re-opening fully for business. Great British Pound GBP firmer versus both […]

Why GBPEUR may still move lower Despite a significant leg downwards in late 2022, it seems plausible, indeed likely, that GBPEUR may have further to fall. Late last year and in early 2023, GBPEUR has stabilised with its fall from the teens proving sufficient to redress the changing fundamentals and flows across the currency pair. […]