The Bank of England’s monetary policy (MPC) meeting yesterday reconfirmed the banks gloomy outlook for the UK economy and voted to keep rates on hold. Not the biggest shock, no one expected anything different. There was a great deal of interest in whether the composition of votes would change as there has been one solitary hawk for the last few months, and some speculated that if he capitulated that might be quite negative for sterling. As it happened the voting pattern was unchanged with 8 voting to keep rates on hold, and the hawk stubbornly voting for a 25bps hike. The MPC did observe that the outlook has deteriorated since the November meeting, and the market has unsurprisingly continued to push further out the time for the first rate hike to 2017. The minutes suggest that falling oil prices have reduced any inflation threat and that the housing market remains relatively subdued. There was some weakening of sterling before the announcement although there was a little bit of a recovery afterwards, this has only accelerated this morning with GBP/USD approaching multi-decade lows again. As we’ve stated in recent blogs we continue to believe that there is scope for further sterling weakness with GBP/USD capable of moving below 1.40 in the near term. This is certainly not a time to go on a shopping trip to the US if you live in the UK!

The ECB also published the minutes of their December meeting in which it becomes clear that some voters did push for more stimulus which would have been more in line with market expectations, however there was too much opposition and the more conservative approach won out. What I did find interesting though, is that there does appear to be some wiggle room to re-assess that decision, which means that we can’t fully discount more aggressive QE in 2016. Whether it happens or not, it is the markets ability to speculate/hope that such a decision might be made which would be most impactful on the euro. But at the moment there doesn’t seem to be even the remotest sniff of that as the euro actually looks fairly stable versus the dollar.

The currency devastation continues for developing economy oil exporters. In December South Sudan and then Azerbaijan abandoned their pegs to the dollar resulting in 85% and 32% plunges for their currencies respectively. Earlier this week the Angolan kwanza fell 15% to a record low versus the dollar as the central bank devalued the currency on the back of slumping revenues accrued from crude oil production. These moves in my view are entirely sensible considering the huge decline in revenues over the last 18 months. When you put it into this context the panic in the Nigerian currency market is understandable, particularly when you realise that the official naira exchange rate has not fallen anywhere near the extent of the aforementioned currencies. And that’s without me mentioning the likes Russia and Venezuela. This is why when I suggest that the official USD/NGN rate staying at 199 is simply unsustainable. Yesterday we saw offers to sell naira above 300 for the first time. I suggest we get comfortable with the new big figure. Unless you believe the oil price is going to start rallying from here it’s hard to see a justification for a reversal of the naira’s fortunes. In the Financial Times recently external experts are already speculating that the Nigerian government has already decided to devalue the official rate and that news might come as early as later this month at the next monetary policy announcement. They suggest a move of the band to the 240 – 250 level. A step in the right direction for sure…

It’s been a rough start for the equity markets today with most down anywhere from 1 – 2%. Admittedly this is following on from decent recoveries yesterday. It’s too early to suggest that the market is basing, more likely we are seeing a consolidation which will precede a final push lower. I am certainly not willing to get too bearish at this point. As we’ve pointed out many times in the past, there are positives from falling oil prices, but these take a bit longer to become evident.

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The pound sterling continues to be the weak link amongst developed market currencies sliding to multi- year lows versus the US dollar. Having spoken to a number of experienced market participants the consensus among them is that a fall below 1.40 is very likely in the near term for GBP/USD, I’m not sure I want to disagree with them! The point is that this seems to be quite specific to sterling at the moment and you can see it from the way EUR/GBP has rallied since mid-December. It’s up 8.5%!!  My take on this is that as the FOMC were pushing for an interest rate hike, the Bank of England under Governor Carney have opted to stay firmly on the side-lines. It has not been so clear to him that there is any need to exit the era of extraordinary monetary policy and in a sense I can understand this. After all the UK is not a continental super-economy in its own right with the ability to weather global economic storms and more specifically the turbulence coming out of China. The UK economy is much much smaller than that of the United States and it is far more open to global trade flows. Furthermore, the UK, not having a reserve currency is not able to rely on generous investors holding on to its sovereign debt. As I mentioned some months ago, the UK has turned from being a net owner of foreign assets to deficit. Largely brought on by the huge amount of debt issuance in the wake of the global financial crisis. This means that as interest rates rise in the UK there are likely to outflows, and more crucially it makes the UK’s external position extremely vulnerable. I believe these are the considerations exercising the MPC, and they’ve been lucky that falling energy prices and deflationary headwinds from China have given them cover to maintain their monetary policy stance. The nightmare scenario is if inflation rears its ugly head in the UK and forces their hand, the UK gilts market could be smashed and it would lead to a currency crisis. Of course we’ll keep you all updated if we think this is a serious risk.

Elsewhere Brent crude has now traded below $30 a few times, it’s likely to spend a long time under that key level, and strategists at some of the larger investment banks are already talking about $20 oil. Great news for consumers but an unfolding disaster for commodity exporters. I wouldn’t exactly call these economies – the likes of Russia, Venezuela and Nigeria spring to mind – sinking ships but there are likely to be extremely tough years in front for some of these countries and their currencies are reflecting this already. The announcement that the Nigerian central bank, CBN, will no longer supply dollars to bureau de changes is excellent news as something needed to be done to stem the bleeding of reserves, but it’s only a small step in the right direction. As things stand the market will determine where the parallel market rate goes from here. I hate to say it but things could get dramatically worse for the naira before any stabilisation occurs. After all there needs to be buyers of the naira for it to turn around. The CBN was the biggest buyer and they’ve left the building, work it all out for yourselves. For things to turn around, investors have to feel that the Nigerian government has got a credible economic policy in place that will enable businesses to make the long term investment decisions that will be necessary for recovery. I’ll only observe, having spent Christmas in Lagos that walking through a Shoprite shopping mall which was as large as any mall I’ve been to in the UK outside of Westfields. It was difficult to move around for the amount of footfall. There is a vibrant consumer culture there and clearly money to be spent. The smart guys surely know this and I can imagine a stampede to get in on the action in Nigeria once investor confidence is improved. Something to watch out for. The CBN letting go of the illusion of the official exchange rate would be a step in the right direction, but I’m not sure they have the conviction to do that yet.

This has been an ugly start to the year for equity markets with the S&P 500 down almost 10% already. Still I am yet to be convinced that this is the ‘end times’. I could easily see this market dropping a little bit more before a recovery gathers strength. For now I am watching the low 1800 levels as the key support area from which the green shoots of recovery should spring. It seems clear that it will be extremely difficult for the Federal Reserve to be as aggressive with tightening as their December forecasts seemed to imply. But I remain convinced that the key data points to watch out for in 2016 will be the strength of the US labour market, particularly wage growth. Manufacturing already seems to be in contraction mode, no doubt due to the strength of the greenback, it’s hard to see FOMC members jumping to tighten. If there’s one thing central bankers hate, it’s to be forced to undo what they’ve only recently done. The only question is, will the market eventually start reflecting this reality in the dollar? Perhaps it already is, as both the euro and Japanese yen are actually holding up quite well versus the dollar at the moment. The weak links are where we are seeing crises – Emerging markets – or the potential for crisis… the UK.

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Good morning

Emerging market “enjoyed” some respite yesterday (and today’s open) on the back of calm international markets brought about mainly after the PBoC “fixed” the CNY again at around 6.5650

This respite though (in my opinion) is going to be short lived. The cause has not gone away, and while the antibiotics have eased the pain (for now) a major operation is needed to fix the problem once and for all. Having said this we are in for a very difficult year as oil, commodity and Chinese growth continue to fall and falter. While the PBoC are doing what they can to stabilise the markets and the Yuan, I really believe they will have no other option but to let the CNY rip. A weaker Yuan should go some way to help exports and in so doing prop up the economy. However the Chinese also need foreign demand for their products to maintain and support output and the manufacturing sectors.

For the past few days I have been saying the FED will simply HAVE to wait longer to raise rates than (they) hoped for. Seems I have an ally who thinks the same – Jeffrey Gundlach co-founder of Los Angeles-based DoubleLine Capital has said the (US) economy is too shaky for interest rate increases. Mr Gundlach further commented that Global growth might slow to 1.9 percent this year with U.S. manufacturing already in a recession, putting the odds of a recession at about 50 percent if the services sector falls more. “We could be looking at a really ugly situation during the first quarter of 2016,” he said. “It’s particularly more likely to happen if the Fed keeps banging this drum of raising interest rates against falling inflation.”

To add fuel to the fire, Oil dropped below $30 a barrel in New York for the first time in 12 years on concern that turmoil in China’s markets will curb fuel demand. According to Morgan Stanley a rapid appreciation of the USD may send Brent oil to as low as $20 a barrel. As things stand and with OPEC not about to cut production, this is fast becoming a reality. Given what I have said above about delaying the FED rate hikes, coupled with falling oil and non existent inflation, the EUR (USD) might find some unfamiliar support. Truth be told, a rally in the USD to and through PARITY is really the last thing we need right now.

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Good morning

OI VEI – Emerging Markets! In freefall. Yesterday S.African ZAR, today Nigerian NGN.

Nigeria’s naira currency was quoted at a record low of 282 per dollar on the unofficial market on Monday (285-290 Tuesday) after the central bank said it would stop dollar sales to retail bureaux de change (BDC) operators, one trader said. Nigeria’s central bank is halting dollar sales to non-bank foreign exchange operators and letting commercial banks accept dollar deposits with immediate effect, its governor said on Monday, in an effort to shore up dwindling foreign reserves. DISASTER!!

ZAR: since January 2015 the ZAR has fallen from 11.56 to a low of 18.0617 – a fall of 36% (mouth watering). While the ZAR has recovered over the past 24 hours, to trade at 16.86 the damage has been done. FX vols have exploded as a result trading mid 18’s (1m) on the 31st December it is now being quoted mid 32 (1m) and 22 (6m). The carry trade is dead – RIP.

CNY: After falling sharply last Monday and Wednesday following the stocks sell off, USDCNY has appreciated “sharply” with the PBoC fixing the rate at 6.5628. China is continuing to instil a degree of stability by announcing stable to firmer fixings. More stable fixings may be a sign that the NEER has reached a level (100) that the authorities are comfortable with. Both the FED and PBoC have remained largely “quiet” on the comments front (actions speak louder than words). The global economy needs a strong China and for this reason major Central Banks are standing back and allowing the PBoC to do whatever it takes to shore up the economy. Forget trade wars, currency wars, this is a time when unity and collaboration is needed.

As I have been saying over the previous week, the FED will no doubt be thinking they simply cannot raise US rates in the short term as the oil price continues to fall (-2.30% this today), 0.00% wage growth and stagnant CPI (despite impressive NFP numbers +292k last Friday). As Ms. Yellen commented in December, while the decision to raise rates will be data dependent it will also be dependent on external factors (China). So for now rates stay at 0.25%…

GBP: continues to trade heavily. After bouncing above 1.46 in late European trading, the currency has been beaten again and is now trading SUB 1.45 in early European trading. The EU referendum and state of the UK economy (no rate hike expected anytime soon) has meant the GBP is less attractive to hold.

Good luck and let’s be extra careful out there

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On the face of it, the non-farm payrolls number published on Friday was stunning. Economists had been expecting 200,000 new jobs created a drop from the number in November, but the reality was hugely more positive than that. 290,000 new jobs were added to the labour market which was an improvement on November’s 252,000, and a very solid end to the year (indeed the 3 month average indicates the fastest pace of jobs growth for the year). But as I said earlier… “on the face of it”.. because average hourly earnings were flat. The United States economy remains in a paradigm where unemployment is falling at a robust clip but workers still seem unable to negotiate better compensation despite tighter labour market conditions. One might argue that the narrow definition of the unemployed used is the problem, because when you add individuals who are capable of work but have given up searching – the U6 measure – then the unemployment rate jumps from 5% to about 10%, and perhaps it really is as simple as that. But is it? We are seeing exactly the same phenomenon in the United Kingdom, a seemingly tighter labour market but lacklustre wage growth. No doubt some labour market economist will come up with a treatise which explains the reason for this, but for now everyone is scratching their heads. Despite the dramatic strengthening of the dollar in the wake of the data, it is not clear that this will be considered sufficient by the Federal Reserve to start putting us on notice for a further rate rise. As I have mentioned in recent blogs, the FOMC will be keeping a careful eye on inflation risks, and at the moment I would guess the scales are tipping in the other direction – we see falling energy prices and stagnant wage growth, which looks more disinflationary than representing a threat of future runaway inflation. Perhaps that’s just me!

Elsewhere it looks like the pound sterling is taking a bit of a breather from its recent freefall. We continue to believe that sub 1.40 (versus the dollar) is possible before all is said and done, but as always with trends there will be pullbacks, and I believe that is what we are seeing today.

As I’ve mentioned before 2016 could continue the tough trading conditions for emerging market currencies. The South African rand has been the victim this morning falling to record lows, at one point USD/ZAR went as low as 18.06, if you recall just a decade ago USD/ZAR was trading at around 5! The word is that Japanese carry traders have finally decided to bail out of this currency and who can blame them, they buy currencies like the rand to earn superior levels of interest (why wouldn’t you if your home savings rate is 0% and you can earn 10% elsewhere?), but when the currency you invest in is making capital losses in excess of the interest you earn the exercise is pointless.

Elsewhere in the developing currency space, the naira continues to suffer, although as I’ve said before the naira’s losses are about par for the course when you look at other commodity dependent currencies. The central banks restrictions are biting and dollar supply in Nigeria is as thin as it’s ever been. I continue to believe that the only way things turn around for the naira is for alternative sources of foreign income are developed, and you don’t get that by maintaining an artificially expensive FX rate. The CBN continues to stick to a policy that was discredited in the 70s and 80s, sadly I don’t think much is going to change until economic realities are accepted.

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As my colleague and fellow blogger has already observed, it’s been quite a start to the year. May I first take this opportunity, now that I’m back from sunnier climes, to wish you all a healthy and prosperous 2016. Sadly our concerns about 2016 could pose a threat to our collective financial health and prosperity! I thought it would be apropos to talk about some of the main issues for the year as I see them. I don’t claim the ability to peer into the future, but you don’t have to be a mystic to identify the main threats and opportunities for the coming year. Here are a few of them…

• Will the US Federal Reserve continue to tighten policy?
• Will the ECB continue to ease policy in the Eurozone?
• What can China do to avoid an economic catastrophe?
• Will commodity prices continue to collapse? And what outcome is more likely at this stage from lower energy prices, the boost to consumer’s disposable income, or the confidence sapping impact of job losses and abandoned capital investment in the energy sector?

These are all important questions, but it all boils down to one thing for us… what will this do to currencies?? I believe the Federal Reserve will hike 25bps a few times this year, because I expect the labour market to continue to tighten as the US consumer benefits from a halving of energy prices over the past half year, and the disinflationary impact of cheaper consumer products from a devaluing China. In my opinion the FOMC will be pre-disposed to look through the disinflationary impact of falling petrol prices as the unemployment rate dips comfortably below 5%. While there will be much gnashing and wailing at a stronger US dollar by exporters, this is likely to be overwhelmed by a pickup in wage growth as employment conditions continue to improve. I don’t believe the greenback will be on a one way trip higher though, in fact I think we are likely to see at least an interim high for the dollar in the first quarter of this year before a deeper correction occurs, however, even saying that, I continue to believe that we are in the midst of a multi-year dollar bull trend, and we will eventually see an even stronger US dollar. The risks to this view are all to do with events outside of the United States.

I am actually quite positive (in relative terms) about the Eurozone, we should see increasing evidence of the benefits of quantitative easing, particularly the competitive benefits of a weaker euro boosting even struggling Eurozone economies. However if, as I suspect, we see a correction higher in EUR/USD at some point in the middle of the year, along with blatant efforts from China to weaken its currency, I suspect the ECB will look to ease monetary policy further. Let’s not kid ourselves folks, all these guys want to do is weaken their currency, it’s a “beggar thy neighbour” type policy and they are all trying it, apart from the United States which is moving on from this strategy.

Talking about the Chinese, it’s entirely possible that the economic distress there is even worse than we think, it’s really difficult to analyse the published data, but as I’ve already alluded to, currency weakness is an obvious palliative. The problem is, that when we are concerned about China, we can’t just focus on the Middle Kingdom, we have to look at a swathe of commodity producing emerging market satellites whose fates are inextricably linked to the fate of the Chinese economy. Think Africa, think South America, even the Middle East via the commodities linkage, all of these regions have become highly dependent on the Chinese commodities consumption binge and will continue to suffer the consequences of enforced cold turkey. These are where the unknown unknowns are. These are where the risks that link back into the global financial system and throw everything into chaos are likely to reside. In the mid-1990s, Mexico was the first big victim, this time around Brazil could be the one to watch out for, even if there is an Olympics in Rio! We can’t know how bad things might be as a result.

The bottom line is that I expect dollar strength to persist for a while, but a messy correction is almost inevitable at some point before the bullish greenback trend re-asserts itself. We expect emerging market currencies will continue to have a tough time of it in 2016.

Today we’ll get to see the first truly significant data of 2016, the US labour market data release, non-farm payrolls. Economists are forecasting another 200,000 new jobs created, but we should also pay increasing attention to the average hourly earnings number. The FOMC will be watching inflation closely and that is as good as any data to capture accelerating wage demands in the United States. The dollar has actually been weakening a bit in recent days against the Japanese yen and the euro, but the pound sterling has remained very weak. So far this morning the dollar has rallied against the yen and euro, but struggled against the pound sterling. I suspect that we could see a little bounce in GBP/USD today, barring any outlier result from the labour market release….

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Good morning

Where do I start?  Stocks routed AGAIN, USD stronger AGAIN, CNY routed AGAIN, EM currencies routed AGAIN. This is quite simply a blood bath. What a horrible start to 2016. Investors fleeing into precious metals.

CNY (onshore) – The PBoC fixed USDCNY 332 pips higher to 6.5646, the largest move since August 2015, with the CNY weakening by 0.58% to 6.5937. The USDCNH (offshore) spiked to 6.7618 on the announcement, but retraced the move subsequently on suspected intervention. The CNH-CNY spread stands at 932 pips, after yesterday’s widest-on-record spread of 1441 pips at the close. Chinese stocks triggered the 7% trade halt for the second time this week leavings global stocks in freefall. This is a global problem and one which will no doubt delay any US rate hike over the coming months (unless we see a reversal of the losses experienced this week). In light of the market rout, the Chinese Securities Regulatory Commission (CSRC) has imposed a limit on the amount of stock large shareholders can sell. Effective from 9 January, major shareholders can only sell up to 1% for three months. The restriction replaces an existing six-month ban on any secondary market stock sales that is due to expire tomorrow. In its response to the market reaction to the weaker CNY fix, the CFETS, a PBoC subdivision, warned that “there is no basis for continuous RMB depreciation. The RMB remained generally stable against a basket of currencies in 2015. The RMB exchange rate regime will continue to be market-based, with reference to a basket of currencies”. The market will closely watch China’s foreign reserves for December, which are scheduled for release later today.

Oil also extended its losses, with Brent reaching its lowest level in 11 years. A large US stock build in gasoline helped fuel further weakness in oil, in addition to considerable risk aversion.  Gold gained nearly 0.7%, while the S&P futures slid 1.5% during Asia trading.

FOMC released their minutes last night regarding the rate hike in December. The minutes pointed to a strong consensus regarding the expectation that any rate hike path would be gradual. The committee saw gradual hikes as keeping policy accommodative, which was important to support labor markets and inflation. The members felt that it would take time for inflation data to confirm the committee’s outlook, and that a gradual path would allow time for the committee to assess the feedback between policy normalization and economic activity. In addition the FED members noted it is easier to raise rates in response to (strong) data outperformance than it is to provide further easing should the outlook worsen. This last point remains important, given the committee’s view that risks to growth and inflation remain tilted to the downside. While the above relates to the US economy, what was not mentioned was the fall out (that we are currently seeing) from China. Back in October the FED delayed raising rates as a result of the economic woes in China, and no doubt the current rout will be taken very seriously by the FED (members) when they meet again to decide on whether or not to hike. Honestly, given what we have seen this week they simply cannot raise rates.

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Good morning

The Stock rout continues unabated. The Dow and S&P had their chance to shine this morning falling over 1% with European stocks not far behind. It has been a horrible 48 hours with Chinese worries (Services PMI fell to a 17 month low from 51.20 to 50.20) being the main reason for the stock rout. To add salt to the wound, reports overnight that N.Korea tested a hydrogen bomb sent stocks lower and CNY weakened as a result. You remember when the USDCNY was trading at 6.3600 and I said further CNY devaluations were guaranteed – well here is the proof that I was right, with USDCNY falling to 6.5350 overnight. And as expected, the US have said nothing. They seem to accept that the CNY has to continue falling to boost exports and thus the economy or else face a real dilemma when they have to decide whether or not to raise rates again. Remember back in October 2015 the FED delayed raising rates as a result of the Chinese GDP woes. Well we are back where we started and should China continue to experience woeful economic data, the FED will have no other option but to delay raising rates further.

The USD continues to trade strongly with EURUSD fast approaching 1.07 barrier and GBPUSD 1.4600 barrier. Cast your mind back a couple days, I wrote the USD was heading to PARITY (EURUSD) and GBPUSD towards 1.4565 (low of 2015) – this seems to be gathering pace with each passing day. As a result of the strong USD, EM currencies have continued to be sold off with investors all heading for the door at the same time.

Have a good day ahead

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Good morning

No rest for the wicked.

China causing all sorts of problems and we only 2 days into the new year. After yesterday’s blood bath Chinese stocks rallied 1% after initially falling over 3% again at one stage. One cause for the volatility in China’s markets is investors’ uncertainty about how the stock regulator will handle a ban on selling by large stakeholders which is expected to expire on Friday. Analysts estimate the ban, one of the many bailout measures introduced during the summer stock crash, could free shareholders up to sell around 1 trillion yuan of shares ($152.96 billion), a prospect that triggered a steep selloff Monday and which caused markets across the globe to sell off. On Tuesday before China markets opened, the stock regulator aimed to quell investor worries, saying such large scale, coordinated selling was “unrealistic,” and that more guidelines would be announced later in the day. Global stock markets have reacted to the news climbing over 1% at the open. No doubt this story will continue to plague the markets and further extreme volatility is likely.

The USD claimed victory on Monday (and this morning) with the EUR(USD) falling 1.50% while the GBP(USD) fell 1% thus resulting in EUR(GBP) falling from 0.7425 to 0.7345. In other words we now have a situation where we not only have the USD rallying as a result of the US-EU interest rate differential (prospects) and economic growth, but also the Chinese growth issue. For FX traders this is manna from heaven (volatility = opportunity). FX volatility has as a result climbed (1%) from the close in December with EURUSD 1m now 10.20/10.50, 3m 10.05/10.20 and GBPUSD 1m 8.35/8.75 (+0.75%), 3m 8.50/8.90 (+0.65%) and 1y 10.40/10.55 (+0.25%). Option traders are looking for continued volatility over the coming weeks and if my projections are right about PARITY (EURUSD) over the coming 6-8 weeks, you can expect the levels above to climb higher. No doubt the uncertainty surrounding US interest rates, EU economics, and Chinese growth (demand) will continue to play havoc in the FX markets.

EM currencies as I have noted many times will bear the brunt of the USD strength with the likes of the ZAR, TRY, MXN, BRL, and NGN already starting to show signs of further weakening. Not a pretty sight. ZAR FX vol stands currently at 1m 17.75/19.00 and 1y at 18.50/19.75 – TRY 1m 13.00/13.75 1y 14.50/15.50 and teetering on the edge.

Volatility is here to stay!! Prepare yourself for further EM losses and USD gains. It the norm.

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Good morning

What a horrible start to the year in China and global markets as China’s stock market falls 7% following disappointing Manufacturing PMI data falling from 48.6 to 48.20 (expected 49.0). European markets opened over -1.75% down as a result of the unexpected and very disappointing Chinese data.

The USD will likely find support in Friday’s NFP report. NFP data of over +150k over the coming months should be consistent with a gradual increase in the FED funds. Given the high expectation of NFP I continue to think the USD will outperform and the FED will deliver another 0.25% hike over the coming months (to June) followed by an additional 0.50% of hikes for the remaining year. Currently, FED funds price in only about 0.10% chance for March and 0.50-0.60% for the remainder of the year. Following the ECB’s disappointing rhetoric at their meeting on the 3rd December and only 0.10% fall in depo rates, the increased interest rate differentiation (between EU and US) as well as the improved economic situation in the US, will in all probability see the EUR fall through PARITY over the next 4-8 weeks – especially as traders return to their desks and start piling on positions.

As for the GBP, Mixed December PMIs will be the focus this week including manufacturing (Monday; consensus: 52.8; last: 52.7), construction (Tuesday; consensus: 56.0; last: 55.3) and services (Wednesday: consensus: 55.6; last: 55.9). The GBP traded heavily on new year’s eve given the thin markets and I think the GBP will continue to weaken over the coming months as the market concentrates on downside risks, including aggressive fiscal tightening and the impending EU referendum. However against the EUR the GBP could have mixed blessings, in that it is “hoped” the EUR will deteriorate vs the USD at a faster pace than the GBP vs the USD. If this should happen the GBP will find some respite and rally vs the EUR. Overnight we saw the currency fall to 0.7425 (1.3468) following on from Thursday’s sell off (GBPUSD).

Have a good day ahead and HAPPY 2016

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Any financial promotion contained herein has been issued and approved by ParityFX Plc (“ParityFX”); a firm authorised and regulated by the Financial Conduct Authority (“FCA”) as a Payment Services Institution with registration number 606416.  It is for informational purposes and is not an official confirmation of terms.  It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to.

Opinions expressed are subject to change without notice and may differ or be contrary to the opinions or recommendations of ParityFX. Unless stated specifically otherwise, this is not a recommendation, offer or solicitation to buy or sell and any prices or quotations contained herein are indicative only. To the extent permitted by law, ParityFX does not accept any liability arising from the use of this communication.

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