Morning Brief – Where does GBP go in 2020?

Where does GBP go in 2020?

 

According to a poll of 65 FX Strategists the answer is that it will appreciate 3% versus the USD. Having spent a lifetime in currency markets, I have to tell you that this is going to be wrong. The 3% number is the average of what those FX sages have predicted. Now it could of course follow that the average prediction is correct but there is no greater chance of that than one of the outliers being right. So much for that, but what we believe is that GBP will be more volatile against both USD and EUR as the trade talks both between China and USA and especially EUR and U.K. develop over the next few months. And that means that what we all need to think about is what the range of GBP will be in 2020. The answer to that versus USD at present is 1.25 to 1.35 and versus EUR is 1.12 to 1.22 or 0.8929 to 0.8197. Now that’s a range that allows our private and corporate clients to set a strategy for hedging their exposures- and rather more meaningful than just predicting a rise of 3%.Give us a call to discuss.

 

 

US Payroll Report plus the US Economy

 

The release on Friday was examined minutely by analysts and demonstrated that unemployment at 3.5% was at a 50 year low, wages increased at their slowest rate since 2018 and the increase in jobs was lower than expected. Do not expect US interest rates to rise in 2020. The economy is not that strong so needs further nurturing. And in case you are wondering: interest rates in both the Eurozone and the U.K. are not expected to change either.

 

 

Chunky Deal

 

Cheung Chung-Kiu, the Chinese property magnate has managed to snag a headline with his purchase of a Knightsbridge, London mansion for GBP 200 Million. However it’s worth drilling down to see what the savvy entrepreneur has got for his money: 45 bedrooms, 7 floors and 62,000 square feet. At GBP 3,225 per square foot this represents value for that area of London and while undoubtedly a big ticket, when renovated as an apartment block, it could be worth between GBP 500 million and GBP 700 million. Unless it is kept as a single residence. Previous owners have included Rafic Hariri the late former PM of Lebanon and Sultan bin Abdulaziz al-Saud the late Crown Prince of Saudi Arabia. Meanwhile it is being taken as a post Brexit vote positive for the UK property market.

 

 

 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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