SGM-FX insights

UK Branch Banking This week has revealed the difference in bricks and mortar strategies between the traditional clearing banks and first an ex building society now a bank and then a challenger bank. The clearing banks have been efficient and some would say ruthless in shutting branches. There are now 4,000 branches in the UK […]

The parapet With high US yields and strong US data publications, it is not the time for currencies to stick their head above the parapet. Unfortunately for GBP, the attention that the Prime Minister is drawing to himself, and the conservative party conference, runs the risk of highlighting the political risk associated with GBP. With […]

British Pound With GBP back to where it started the year pretty much, there are some stories starting to appear along the lines that while that may be the case, GBP is still up 18% from a year ago following the Truss/Kwarteng mini Budget fall out. That comparison while of course true is not a […]

GBP While the Bank of England’s decision to pause on raising rates by the narrowest of margins with voting 5-4, that resulted in GBP being sold sharply which reflects the market’s view that while inflation at 6.7% looked better than expected yesterday, the effect of higher oil prices and petrol and diesel at the pumps […]

Bank of England It is the big week in UK markets not because there is much doubt in the minds of economists that rates will go up once again on Thursday, but rather more because the “clever” money is predicting that this increase will be the last. What could go wrong? Assuming rates go up […]

UK Interest Rates Despite soothing words from BoE Governor Bailey last week on interest rates reaching the end of the rise cycle, wage inflation of 7.8% in the 3 months to the end of July plus unemployment a tiny bit higher at 4.3% both suggest that the end may have been called too early. So […]

Speakers Many FX crosses observed volatility yesterday based upon the words of decision makers at scheduled speeches. Words from policy makers at the Bank of England and the European Central Bank in particular caused significant shifts in spot prices and liquidity conditions within major pairs including EURGBP, GBPUSD and EURUSD. Whilst the words offered to […]

UK Borrowing At GBP 2.58 trillion the UK’s borrowing represents 99% of UK GDP. It seems somewhat perverse therefore for newspapers to speculate about pre election tax cut potential. Apart from crushing inflation and increasing productivity, the reduction of the colossal amount of UK Government debt is now assuming the top priority for a fiscally […]

Data Update: UK Inflation Mixed messages for the UK macro economy were received once again yesterday. As the July inflation figures were released, it was clear that there wasn’t going to be one decisive narrative that would emerge as to whether the reading was supportive or destructive to the view that inflation is cooling in the […]

UK Retail Sales Sluggish July sales due to bad weather and caution caused by poor inflation figures meant that while an increase of 1.5% versus July one year ago was recorded, in real terms after allowing for inflation, that represented a fall. While this may have been an excuse to sell GBP, in fact looking […]

Positioning At least within the G10 space, there has been a lack of conviction behind FX positioning of late. In line with the elevated levels of volatility that we have been seeing, the volume of contracts outstanding and positioning within major FX pairings has been underwhelming. However, as central banks now begin to curtail their […]

UK Interest Rates As expected by 66% of economists polled, the Bank of England duly raised rates by 25bps; 34% anticipated a more draconian 50bp rise. Little or nothing is written these days about the Governor of the Bank of England being required to write to the Chancellor of the Exchequer to explain when the […]