SGM-FX insights

British Pound In itself not really a story but when a Member of the Bank of England’s Monetary Policy Committee opines on the UK currency, the market reacts. Yesterday it was the statement that if investors had not fully priced in the likelihood of further interest rate rises from both the Federal Reserve and the […]

US Treasury Bonds With the 10 Year now back over 4 at 4.07% and the 2 Year at 4.90%, the market has in the past week or so moved dramatically and is now anticipating the Federal Reserve to err on the side of caution and do what it has in fact been saying for the […]

Inflation Following on from Friday’s US inflation release which came as an unwelcome surprise to markets, there was further evidence of stubborn inflation data releases in both France and Spain yesterday. All this adds up to implied  peak policy rates rising by 0.5% in February, the US to 5.4% and Europe to 3.9%. That compares […]

New chapter or (emperor’s) new clothes? The UK and EU yesterday announced a new trading arrangement with respect to Northern Ireland that they believe marks a new phase in political economic relations between the two parties. However, there remains doubt over whether the breakthrough is substantive enough to materially change the UK and EU’s trading […]

UK Government Borrowing News yesterday that the UK government had a surplus ie did not need to borrow in January to the tune of GBP5.4 billion. This followed a December deficit of GBP27.4billion which was the worst performance in the 30 years of records for a December . Before declaring victory that the tide has […]

British Pound After a torrid time on Wednesday, there was a steadying session for GBP yesterday with GBP clawing its way back slightly to GBP/USD 1.2050. Interestingly despite the resignation of Nicola Sturgeon and the implications for an independent Scotland, and reported progress on negotiations between the UK and the EU on the Irish border, […]

Knock-On As we have covered, the US Dollar has remained well supported. The bond rally that has been observed over the past few weeks has been reversed in the face of strong US economic data and a hawkish rhetoric coming from Federal Reserve Officials. What is also worth noting is that the presence of a […]

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. […]

Short covering   Evidence from the CME provides an interesting qualification to the CFTC positioning data that GBP investors have been watching closely. For many years now, markets have held a net short position on GBP, fluctuating from more neutral grounds through to a heavy focus upon achieving selling conviction behind the Pound at times. […]

The Hunt is on: UK Budget and the Global Population   The Autumn budget is drawing closer with Jeremy Hunt, Chancellor of the Exchequer within Rishi Sunak’s government, due to announce the measures to the House of Commons on Thursday. Sterling had a rocky start to the week yesterday with major crosses falling as the […]

Yields tumble as fiscal progress is claimed   Having taken immediate action to reverse those promised taxation adjustments that had not yet taken effect or had not yet been passed by Parliament, Chancellor Jeremy Hunt still faces a huge challenge in restoring confidence to UK public finances. Measures that have been reversed include the cut […]

Budget delay   Following Rishi Sunak’s first full day in office yesterday there is an emerging feeling of relative calm within UK assets. The bond market appears to have been the driver of many wider asset flows with global yields falling as debt investor confidence begins to return. In the UK, yields, particularly on very […]