SGM-FX insights

A Tale of Two Cities Very early yesterday morning Lloyds Bank of the UK released the results of its Business Confidence Survey and it is fair to say it was more Bah Humbug than full of seasonal cheer since it showed the largest monthly fall since August 2022 down from 42 to 35. Meanwhile the […]

Will there be a last Hoorah? Each December there is a moment where the final risk adjustment of the calendar year takes place. Some in recent memory have been particularly violent and often late. In 2020, the Brexit deal stuck on Christmas Eve saw a particularly sharp adjustment with markets preparing for a new framework […]

GBP strong for long? To begin with GBP is at its highest level since July this year when it briefly marched up to GBP/USD 1.31 and the reason for that is that the market has bought into the argument that the Bank of England will keep interest rates higher for longer. On that basis, holders […]

UK Interest Rates This comes under the heading of do not shoot the messenger: the market believes that rates will/should be cut sooner rather than later. The Bank of England is making it clear that its Monetary Policy Committee will not be so easily swayed. Why? If you have not spotted it, it is largely […]

Higher for longer The message that most central banks have been trying to push throughout their hiking cycles has been to expect rates to rise and remain elevated. It is the ultimate level of rates more than the speed at which they rise that determines how the economy receives monetary tightening. At least in the […]

Japan Some of the market’s Great Minds spent yesterday afternoon debating whether Japan could get away with raising interest rates at the same time as the Central Banks from the other major markets are starting to cut their interest rates. In short, Japan can and probably will, since its monetary policy has been effectively in […]

Rather you than me, Christine As we and the market alike have been speaking about recently, Eurozone rates are all the rage. As we highlighted yesterday, the path for rate cuts next year has already captivated the market with easing being forecasted as early as Q1 2024. As we approach the Christmas period, we must […]

European Interest Rates More momentum on rate cuts in the Eurozone as expectations grew for cuts starting in March and totalling 140bps in 2024. Equally in the UK cuts of 130bps starting in June are being pencilled in to market calendars. What this means is that GBP/EUR is looking more than especially good value at […]

UK With 2 year mortgage rates less than 4% and 5 years at 4.39%, the implication for the housing market which has responded by a modest 0.2% rise, is that rates are soon going to fall and that the UK economy is stabilising. While there will doubtless be setbacks to this rose tinted scenario, for […]

UK Labour market The Bank of England yesterday broke cover to drive the message home that due to the UK’s labour market remaining tight, it was premature to start talking interest rate cuts and it was not just Governor Bailey who was calling for higher for longer interest rates but also his MEPC colleague Jonathan […]

British Pound Two days after the Autumn Budget Statement, the Pound is hanging in there and is looking firm. Why? Despite some attempts to talk it up on the grounds of the economy not in fact contracting, but merely marking time, the real reason is that while not being shouted from the rooftops, but definitely […]

UK: We Will Cut Taxes This morning will demonstrate that it is worth listening carefully when politicians make promises. In this case it is the word “will”, because with the economic tank almost completely dry, while he is a recent convert to the idea of cutting taxes, Chancellor Hunt has limited scope to do anything […]