SGM-FX insights

Winter is coming Here in the UK, we have seen the IMF consistently downgrade growth expectations. Whilst the IMF has been pessimistic specifically on UK growth, routinely placing the UK at the bottom of the pack, global growth forecasts have also been downgraded as interest rates have risen. Still, the condemnation of UK growth looks […]

UK Interest Rates  Previously expected to peak at 4.5%, UK interest rates are now (mostly) expected to peak at 5% in the summer. Worth examining what the Bank of England forecast the annual inflation rate to be in February 2022 for 1 year forward in February 2023: 5.2%. As we know it is almost 5% […]

UK Inflation  At 10.1% March UK inflation is not only higher than the other developed markets, it is not coming down much which suggests that the Bank of England has misjudged the amount of interest rate medicine that is required and also the speed that it needs to be administered. The expectation was that inflation […]

Not quite 10 Data was expected to be particularly important to GBP this week. On Tuesday, the market observed the latest UK wage data which showed unexpectedly high growth figures within household earnings. This has set the stage for concerns surrounding a miss in inflation too, with wage price inflation often having a significant influence […]

UK Job Market  In the quarter to end February in the UK 220,000 more people were looking for jobs than in the previous 3 months even as the number of vacancies fell from 1,250,000 to 1,100,000. This means that the economic uncertainty is making people seek income. So even before PM Sunak called for UK’s […]

UK Growth: February 2023 It is fair to say that this piece could be rather short since the UK economy has not grown at all in February with strikes being given as the prime reason. Maybe it is therefore unsurprising that UK Chancellor Hunt has been very quiet since his Budget Day performance in March. […]

IMF The International Monetary Fund pronounced in a popular way for a change yesterday, announcing that interest rates would only remain high for a short time and indeed the level of interest rates would revert to pre-pandemic levels. No mention of when that might be, but nevertheless providing some cheer. Naysayers might understandably point out […]

British Pound Some chilly pre-Easter sunshine in London yesterday for GBP which for the first time since last year breached GBP/USD 1.2500 and managed to improve versus EUR with GBP/EUR 1.1445. Other green shoots with GBP/ZAR 22.25 and a weaker Aussie with GBP/AUD 1.85. (See below as to why Aussie weakened) Australia Not content with […]

UK Food Inflation If you doubted it, the evidence is there to see: food prices are at an all time high and a large part of the problem is sugar which is up 9% in the past year. Despite victory on inflation being declared in some quarters, the food inflation index has not received the […]

Bank of England When the Monetary Policy Committee raised interest rates yesterday by 25bps, that was broadly expected since the concerns about the health of the banking system had largely receded -at least in the UK. What was not expected was the leading once again with the corporate chin by the Governor with the pronouncement […]

Testing conviction With a Bank of England decision scheduled for later today and a Federal Reserve decision last night ringing in the ears of markets, traders should be braced for volatility. The decision last night by the Federal Reserve showed the FOMC treading a delicate path between demonstrating their commitment to taming inflation but being […]

Bank of England The UK’s Monetary Policy Committee will pronounce tomorrow and uppermost in their minds will be the UK Inflation release which came out first thing this morning. Because it is higher at 10.4% rather than significantly lower than last month’s annualised 10.1%, not only does the Bank of England have more egg on […]