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So far Jamie Jemmeson has created 51 blog entries.

A Double Dip Recession or V Shape Recovery, How Will Sterling Be Affected?

By Jamie Jemmeson ACSI, MSTA at Infinity International Background The UK officially entered a recession following the Q2 GDP release in early August - a recession is defined by two consecutive quarters of negative growth. Whilst a recession was not unexpected, the position of the nation’s economy in comparison to its peers is somewhat of a concern. The official reading saw UK Q2 GDP contract by 20.4%, a record low. Compounding the concern for the UK economy is that this is the largest contraction for Q2 GDP amongst its peers in the G7. State of play The UK has not only suffered the highest number of COVID deaths in Europe, with 41,499[1] deaths at the time of writing but is also suffering from the deepest recession in the G7. This is not coincidental; the figures are intrinsically linked. The surge in deaths due to late lockdown dented economic confidence resulting in the dire GDP figures reported. Please don’t emigrate to Japan just yet – it’s not all doom and gloom. The monthly UK GDP figure, as opposed to quarterly detailed above, is likely a more appropriate reading of recent economic activity.  Given the fluid changes in guidance, travel corridors and easing of restrictions we have seen over the last few months, the figures are certainly more upbeat. The monthly figure for June reported an increase of 8.7% – a record single-month increase and slightly stronger than forecasts suggested, with May’s GDP figure also revised higher. This trend has not

2020-09-03T08:20:03+00:00September 2nd, 2020|

GBPUSD Hits Fresh 8-week Highs as Market Awaits US Labour Data

Last week the focus was on the Jackson Hole symposium where Powell confirmed that the central bank would adjust the inflation target to an average of 2%. Powell went on to state that employment will be given greater importance in achieving goals. The central bank is now more confident that higher employment will not lead to higher inflation and the economy will be allowed potentially to run at a faster rate to boost long-term employment. The inevitable implication that interest rates will remain at very low levels for a longer period and potentially undermine the dollar. However, there was some positive news as Q2 GDP data was revised to a contraction of 31.7% from 32.9%, slightly stronger than forecast. Economic data was mixed as US durable goods orders increased but consumer confidence declined to a 6-year low. Closer to home Sterling started the week on the back foot as following downbeat Brexit comments from the previous week. However, GBPUSD rose to fresh highs following the FOMC Chair’s comments. Despite the stress to the UK economy the Pound continues to shrug off negative data. The CBI retail sales survey dipped to -6 for August. The CBI stated that sales are forecast to decline at a faster pace in September with a reading of -17 for the expectation’s component. In the meantime, labour-market trends will be an important focus with August employment cut at the fastest pace since February 2009 and companies expect the rate of job cuts to increase further

2020-09-01T15:50:18+00:00September 1st, 2020|

Sentiment Concerns Emerge Ahead of Packed US Calendar Including Virtual Jackson Hole

Last week we saw the US Dollar remain under pressure as economic data raised some question marks about its recovery. A leading indicator for employment, the weekly jobless claims, increased back above a million posting a figure of 1.1m, which was greater than the forecast of 930k. Compounding the recovery question marks was the Philly Fed Manufacturing data which was lower than expected as well as down from previous reports, suggesting that momentum is slowing. Keeping the Dollar under pressure was the sentiment in equity markets, with news from Pfizer that its Covid-19 vaccine was on course for regulatory review in October, has lent support. Sterling had a whipsaw week as both economic data and trade talk news drove the price. Sterling moved lower initially as speculation mounted that tensions between the UK and EU were raised during their trade talks. It was reported in the Financial Times that Brussels has rejected the UK’s opening demands for continued wide-ranging access to the EU for British truckers. During Friday’s press conference, Sterling once again came under pressure following comments from negotiators Michel Barnier and David Frost. The EU negotiator stated that he was "disappointed" and "concerned", whilst UK negotiator David Frost spoke of "little progress". Meanwhile, economic data continues to remain positive for the UK. Retail sales, services and manufacturing data all improved highlighting that the recovery’s momentum is continuing post easing restrictions. It will be interesting to see if the UK can continue this once the government’s schemes end - Furlough and Eat

2020-08-24T12:00:12+00:00August 24th, 2020|

August 2020 FX Forecast

Given the uncertainty right now, businesses need to have some idea of a consensus (mean forecast) and a potential worst-case (high or low forecast) scenario in terms of FX rate. We have collected the views of over 40 financial institutions to articulate the high, low and mean forecasts for the next 12 months in an attempt to provide this information to businesses. As you will see, the forecast still predicts a high degree of uncertainty based on the differential. Download the PDF report for the details: Infinity_FX Forecast August 2020 Infinity International would be happy to offer a complimentary FX review of your current process to offer a fresh perspective and to highlight any areas that could be made more efficient.  If you would like to organise a time for an exploratory conversation, please leave your details below. The review would encapsulate: Strategy ideation to align FX risk management with your business objectives FX volatility assessment to understand the impact of a significant FX rate Credit terms to ensure efficiency for cashflow when hedging currency (subject to approval) FX pricing to determine your current cost of your current provider vs Infinity International rate Fill out the below form to receive an obligation free FX review: Request a FREE FX Review We’re here to cut through the clutter and industry jargon to provide you with relevant information so you can build your understanding of foreign exchange markets.

2020-09-01T15:53:12+00:00August 12th, 2020|

EU Summit Continues Ahead of Service and Manufacturing Data from the UK and Eurozone

Last week Sterling was treading water as it continues to deliberate what COVID-19 and Brexit means for the longer-term prospects of the nation. Last week’s reading monthly GDP highlighted this uncertainty. The monthly GDP saw a 1.8% monthly rise in May, well below expectations of 5.5%. In the meantime, UK employment data whilst better than expected, received a tepid response as several companies continue to announce job losses and there is concern that this figure could rise in August as the governments contribution to furlough payments drops with the employer making up the difference. US economic data continues to remain positive. Last week, US retail sales, industrial production and Philadelphia manufacturing data all reported better than expected readings. However, the tone remains cautious as new COVID-19 cases hit a record high in the US of excess of 75,000. The market remains cautious about what this could mean for the US economy. Whilst economic data remains positive, it is backward looking, and the market will keep an eye on COVID-19 and what impact it could have on future data. The focus of the week was on the EU economic summit with the market glued to developments surround the recovery fund. The meeting has extended beyond the weekend and will continue today. The EU recovery fund would be borrowed via instruments on the financial markets, to be paid back sometime after 2027. Leaders are at odds over how to carve up a vast recovery fund designed to help haul Europe out

2020-07-27T16:34:54+00:00July 20th, 2020|

What Facilities are Available to Your Business?

By Jamie Jemmeson ACSI, MSTA at Infinity International A fortnight ago, we published our insight piece on “What hedging tools and what flexibility is right for your business?” in our FX Hedging series. We highlighted what we consider to be some of the salient talking points when deciphering the ideas and products available that could warrant reflection during the uncertain times of coronavirus. Within this FX Hedging series, we published some of the main points and what these could mean to your business in the coming weeks and months as we enter a new phase of life (and businesses) under COVID-19 conditions. This is our final instalment in the series, where we will unpack in more detail “What facilities are available to your business?” If you missed the previous articles in this series, you can catch up: Points to Consider Before FX Hedging in COVID-19 Conditions Can Your Business Identify and Understand its FX Exposure? What Impact Could Hedging Have on Your Business? What Hedging Tools and What Flexibility Is Right for Your Business Towards the start of the coronavirus crisis the Government quickly recognised that cash flow could become a big challenge for UK businesses and swiftly introduced various initiatives such as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Future Fund to try and assist businesses. Whilst they have not escaped criticism, they have helped to ease the burden. It has become necessary for many businesses to reassess their appetite towards risk inclusive of banks, finance

2020-08-12T11:30:22+00:00July 16th, 2020|

Big Week of Economic Data Whilst Brexit and COVID-19 Concerns Remain

Last week was a mixed week for sentiment, with many eyes on the downside due to concern of an increase in COVID-19 cases in the US - new cases growing to north of 60k a day with Florida reporting in excess of 15k a day. In recent weeks, economic data from the US has been to the upside, but as a result of the recent surge Federal Reserve policymakers have warned that activity may be “leveling off” and that more fiscal support may be necessary. In the meantime, UK Chancellor of the Exchequer Rishi Sunak’s Summer Economic Update outlined the second phase of job retention measures. This has come in a three-step plan focusing on jobs, including a Job Retention Bonus to keep furloughed employees in work, a Kickstart Scheme for 16-24-year olds and targeted measures for hospitality and housing. Brexit newswires have been mixed and are likely to remain as such for the foreseeable future. It is difficult to say when exactly talks will conclude, given they had ended earlier than scheduled in the past two weeks; is this a good or bad sign? There were reports that the EU could be willing to compromise on the issue of fishing rights. Cabinet Minister Michael Gove said on Sunday progress was being made in talks but there were still divisions. Gove went on to say, “at the end of this year we are leaving the single market and Customs Union regardless of the type of agreement we reach with

2020-07-13T14:56:02+00:00July 13th, 2020|

Economic Outlook Q3 2020

Will the Reopening Signal Growth or Signpost Another Lockdown? The end of Q1 and beginning of Q2 saw the global economy in a position that it had not previously seen as lockdown hit the Western economies. Our Quarterly Report provides context on the UK, US and Eurozone markets of last quarter and highlights what we believe will be the focus of each of these regions over the coming months. In this report we will focus on the action central banks and governments have taken and the resulting effect on volatility. In this paper we will highlight some of the key factors that could drive GBP, EUR and USD exchange rates over the coming months as well as displaying institutional forecasts on GBPUSD, GBPEUR and EURUSD. Covid-19 may have started as a health crisis, but it quickly switched into an economic and social one. The US lost more than 20 million jobs in a two-month period. Growth forecasts globally were slashed by double figures as the world is facing a situation which it has not seen in modern times. In the second half of the quarter, we started to see green shoots emerge as lockdown restrictions eased across the globe. What does Q3 hold? Finally, we will provide some analytic data from two sources. The first is a survey of 200+ treasury departments which highlights their focus and their views of the lockdown duration. In the second, we will display the currency forecast taken from Reuters at the start of

2020-07-10T15:52:18+00:00July 10th, 2020|

Sentiment Remains to the Upside but Headwinds Persist

Last week it was a mixed week both in terms of data and sentiment. Starting with the downside, Covid-19 concerns and Chinese tensions increased. There was a rise in Covid-19 cases in several countries last week. The US recorded a record high of close to 60k new cases a day, prompting some reversal of restriction easing. Latin American countries have also seen an escalation. In the UK, Leicester was put into lockdown again, as the rest of the nation reduced restrictions further. In the meantime, in the geopolitical arena China’s passed its Hong Kong national security law resulting in sanctions from the US, whilst the UK expressed it displeasure. Despite the negatives, we saw risk sentiment increase. Signs of improving economic conditions were helped by positive reports about progress in developing a Covid-19 vaccine. The headline data release was the US labour data; the US gained 4.8 million jobs in June, far better 3 million expected. In addition, the unemployment rate fell from 13.3% to 11.1%. Central Bankers have also noted that so far, the economic rebound was proving to be stronger than forecast, this may have added to the more upbeat mood. The UK/EU trade talks were slightly disappointing as discussions between the chief negotiators broke up a day earlier than expected; it is assumed they will resume in the coming week. However, supporting Sterling was Chancellor of the Exchequer Sunak’s update to the House of Commons regarding the economic outlook. PM Johnson said that the focus of

2020-07-06T16:31:00+00:00July 6th, 2020|

What Hedging Tools and What Flexibility is Right for Your Business?

By Jamie Jemmeson ACSI, MSTA at Infinity International In the previous blog we addressed the ‘What impact could hedging have on your business’, where we unpacked some of the difficulties of recognising your exposure and having the ability to accurately forecast during these COVID conditions. Given the current backdrop in the UK, now could be an opportune time to consider your framework for managing your foreign exchange risk and what level of flexibility you require. In short, given the current circumstances does your current approach offer you the flexibility you need? Before addressing the flexibility which various products can provide, it is important to take note why this could be significant in the second half of the year. Concerns of COVID second wave – data from the US is starting to prompt fear of a second wave which could weigh on sentiment and impact currency markets. Brexit “No Deal” re-emerges – the UK have declined on extending the transition deal beyond 2020. Recently PM Johnson stated that the UK would be prepared to accept an Australia-style Brexit trade deal, which is not considerably different to a 'no deal' Brexit. UK monetary policy - The possibility of negative interest rates is still not being ruled out by the Bank of England as a policy tool if the economy takes a turn for the worse. The above factors could have an impact on currency volatility as well as the supply and demand of goods. If this happens, as a business you

2020-08-12T11:41:26+00:00July 2nd, 2020|