Brexit Trade Talks Continue This Week, Will There Be a Change of Direction?

Last week market sentiment was jumping around amidst global events, in large from the US. Firstly, newswire saw Joe Biden and his running mate, Kamala Harris, declared as winners of the US Presidential election, pending legal challenges from the Trump camp; these are still ongoing. However, the big shift in investor sentiment was driven by the news of a COVID vaccine. German company BioNTech and the US pharmaceutical giant Pfizer announced via a press release on Monday that their jointly developed vaccine candidate had outperformed expectations in the crucial phase 3 trials, proving 90% effective in stopping people from falling ill. This resulted in equity and oil markets pushing significantly higher whilst the US Dollar weakened as a result. As the week progressed investor sentiment tapered as the market continued to decipher and articulate how this can be rolled out and what challenges remain. In the meantime, the UK’s economic challenges remain as data disappointed somewhat. The UK jobs data reinforced unease over labour-market trends, especially a sharp increase in redundancies. The headline unemployment rate rose to 4.8% from 4.5%  An extension of the furlough scheme provided an element of relief and Sterling was also protected by optimism that vaccine developments would help provide a key lifeline for the economy. The UK's economy bounced back from recession with record growth of 15.5% in July to September, this was slightly below expectations. Furthermore analysts warned that it was likely to shrink again in the final three months of the year

2020-11-16T12:06:47+00:00November 16th, 2020|

Presidential Race Faces Legal Challenges as UK/EU Trade Talks Resume

Last week the main focus was on the US Presidential Election which in the end dragged into the weekend following an unprecedented number of postal votes in particular states. However, over the weekend, Joe Biden and his running mate, Kamala Harris, were declared as the winners of the US Presidential election, pending legal challenges from the Trump camp. The US Dollar weakened on the back of this news, but the news will continue to be monitored for legal challenge developments. The market will continue to analyse the situation but also look at what this means for markets in the long term especially with Brexit trade talks continuing. In the meantime, Sterling received a boost last week as The Bank of England (BoE) expanded its bond-buying program by a bigger-than-expected £150 billion in another round of stimulus to help the economy through a second wave of Coronavirus restrictions. This will start in January and finish by the end of 2021, the BoE said. Officials are ready to step up the pace of purchases if market functioning worsens. Officials led by Governor Andrew Bailey voted unanimously to increase their asset-purchase target to 875 billion Pounds and keep the benchmark interest rate at 0.1%. Officials also slashed their estimates for economic growth, saying they now expected a contraction in the fourth quarter. More positive for Sterling was that there was talks of negative interest rates. In addition, Chancellor Sunak extends furlough out till March 21. Looking to the week ahead, the market

2020-11-09T16:47:49+00:00November 9th, 2020|

November FX Forecast

“Yesterday is not ours to recover, but tomorrow is ours to win or lose” - 36th US President Lyndon B. Johnson By the time this is published, we may have a clear picture of who is going to be residing in the White House for the next few years. What it has once again taught us is that opinion polls analysis do not mean the result will be as easy to predict. Unlike the Presidential opinion polls which at one point seemed to mirror 2016, the FX Forecasts provides a wide range of views that articulates the High, Mean and Low. Challenges still remain surrounding Brexit, COVID 19 and articulating the impact of the US Presidential Election resulting in the divergence in views. We forecast a 1, 3, 6 and 12-month view of GBP/USD, EUR/USD and GBP/EUR rates. Our monthly FX Forecast includes the key dates of scheduled political and economic events that might impact currency markets. Download the PDF report for the details: Infinity_FX Forecast November 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

2020-11-05T14:33:16+00:00November 5th, 2020|

US to Cast the Verdict on Trump’s Last 4 Years

Last week we saw the news focus on the rise of COVID cases in the UK and Europe. France and Germany announced on Friday that they will be implementing lockdown measures; which was swiftly followed on Saturday by the UK's own announcement. Despite the negative news surrounding lockdown, we saw economic data paint a more positive picture as both US and Eurozone GDP growth exceeded the massive contractions in Q2. In addition, the German October IFO survey revealed the first rise in expectations in four months. In the meantime, the ECB hinted strongly at further policy changes in December which are likely to manifest itself in further QE. The US election continues to dominate headlines with Americans heading to the polls on Tuesday. The final weekend saw both candidates continue and drive their campaigns towards the finish lines. As it currently stands according to Real Clear Politics is showing the aggregation of betting odds with Joe Biden showing a 64.7% probability of winning. Michael McDonald, a University of Florida professor who runs the US Elections Project stated that as of Sunday afternoon 34,004,455 in-person votes and 59,126,562 mailed ballots had been returned to election authorities; accounting for two-thirds of all 2016 turnout. It is likely that economic data and news may take a back seat this week and the focus will firmly be on lockdown measures and the US Presidential race. However, there is still a loaded calendar with UK and US interest rate decisions and US employment data.

2020-11-02T15:59:13+00:00November 2nd, 2020|

Focus Remains on Core Matters However ECB and Growth Data Could Change the Outlook

Last week saw Sterling lift following the resumption of UK/EU trade talks, after the early week’s standoff between the two respective trading blocks. Whilst fishing and a level playing field remain sticking points, the objective is to conclude discussions for an emergency EU summit in the middle of November. In the meantime, UK Chancellor Sunak announced a more generous Job Support Scheme starting in November as furlough ends this week. Data from the UK remains mixed with retail sales posting slightly better than expected, but the composite PMI activity showed a slowdown in momentum. However, Brexit trade talks and negative rates continue to dominate newswires. The US election continues to pick up momentum with no real blows landed in the second and final Presidential debate with the US set to head for the polls next Tuesday. Meanwhile, it has been reported that early voting has accounted for nearly a third of the total vote numbers seen in 2016. The week ahead will continue to focus on the progress of the UK/EU trade talks, and the final furlong in the US election, although there are some concerns surrounding current Vice President Pence as members of his entourage have been diagnosed with COVID. The centre of attention for the Eurozone will be the ECB meeting on Thursday, the market is not expecting any stimulus until December so the market will focus on signposting by officials to confirm. Monday German IFO Survey  US New Home Sales Markets will

2020-10-26T15:56:35+00:00October 26th, 2020|

Economic Outlook Q4 2020: Focus on FX Budgeting & Strategies for 2021

This quarter we should see the conclusion of various risk events that have been looming since the turn of the year; namely Brexit UK/EU trade talks and the US Presidential Elections. In a move away from our normal quarterly outlook (after all these are abnormal times), we will be focusing on some of the challenges that businesses are facing as we look towards 2021. We will cover ground on budgeting and deploying a currency strategy that is appropriate for the uncertain future. In this report, we will focus on the action central banks and governments have taken and the resulting effect on volatility. This year has been tough for many businesses, we are all hoping for an improvement in 2021, but in the words of James Cameron: "Hope is not a strategy. Luck is not a factor. Fear is not an option." However, you will also find our regular content where 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. Read the full report: Infinity_Economic Outlook_Q4 2020 Subscribe to receive our updates in your mailbox! This blog post is intended to provide you with information on the services Infinity International Limited (IIFX) offer and should not be interpreted as advice or as a solicitation to offer to buy or sell any currency or as a recommendation to trade. Foreign exchange rates

2020-10-23T15:14:40+00:00October 23rd, 2020|

UK/EU Trade Talk Stalemate Raises the Probability Of “No Deal” Whilst COVID New Cases Dampens Sentiment

Last week much of the focus was on the political gamesmanship between the UK and EU with regards to trade talks as we approached the self-imposed deadline of the EU Summit. In the early part of the week it appeared that progress was being made, however, on Thursday (the start of the EU Summit) rhetoric started to turn sour. Sterling was fragile following comments on trade talks in which EU leaders stated that the UK needs to make “the necessary moves” for an agreement. UK chief Brexit negotiator David Frost said he was “surprised” at the suggestion. Indications are that negotiations are likely to continue for more weeks. Fisheries remain one of the sticking points. On Friday morning PM Johnson stated that the UK will now prepare for ‘no trade deal’. Talks are scheduled to continue this week but whether they happen given the rhetoric is unclear. Cabinet minister Gove stated on Sky News on Sunday “I want a deal, I’m keen to conclude one, but it takes two sides”. Sterling remained range-bound despite the ongoing uncertainty. That said, there wasn’t any fresh ground broken as sentiment echoes a tone of déjà vu. COVID new cases continue to raise concerns as infections rise with London, Essex and York among areas moving to ‘tier two’ whilst Greater Manchester is pushing back against a move to ‘tier three’. In Europe, there have been stronger restrictions implemented in several major cities with the obvious growth concerns becoming more apparent. This may be

2020-10-20T09:35:00+00:00October 20th, 2020|

October FX Forecast

“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” - George Soros Following the news that President Trump contracted COVID and the unknown implications and UK/EU trade talks being extended once again, the level of uncertainty has once again increased with some potential unexpected outcomes looming. With so many unknowns that could materialise, 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 forecasts still predict a high degree of uncertainty based on the differential. Download the PDF report for the details: Infinity_FX Forecast October 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

2020-10-14T13:31:35+00:00October 14th, 2020|

UK/EU Trade Talks Drive Sterling Whilst US Presidential Elections Remain in Focus

Last week we saw UK/EU trade talks continue with Sterling nudging higher as hope for a deal continues to grow as the time to complete discussions extends and erodes. EU Chief Negotiator Barnier stated that a deal was unlikely by the October 15-16th Summit and instead the meeting will be used as a stock checking exercise to understand the state of play. There were also reports that Barnier had been instructed to keep a hard-line position on fishing, however, UK Chief Negotiator Frost hinted that fishing measures could be phased in – a big change in tone to what has been stated previously. Ongoing signs of progress helped keep Sterling elevated. While Bank of England Governor Bailey stated that the economic recovery had been very uneven across the country and that risks are very much to the downside. He commented that he strongly hoped that there would be a Brexit deal, but the post-transition period would not be easy. He also commented that we must use policy aggressively and actively with the bank by no means out of firepower. In Europe, market data was quiet but, not without some rhetoric from the central bank. The Euro was hampered by fresh speculation that ECB President Lagarde would signal that the central bank would move towards further monetary easing, including the possibility that interest rates would be pushed deeper into negative territory. ECB President Lagarde reiterated that the bank does not target the exchange rate but is paying close attention to

2020-10-20T09:20:30+00:00October 12th, 2020|

UK/EU Trade Talks Plus Trump’s COVID Concerns Drive FX Price Action

Last week further demonstrated the sensitivity of sterling to Brexit negotiations. Developments from Thursday onwards highlighted responsiveness as the currency traded between a 150-pip range as positive and negative headlines hit the wires. Sterling was boosted by news that UK PM Boris Johnson and EC President Ursula von der Leyen agreed that talks will continue to "close significant gaps". Brexit headlines are likely to continue to dictate sterling movements. We saw the headline Euro-zone CPI inflation rate declined below expectations to -0.3% for September from -0.2% previously. The core rate (excluding food and energy) also declined to 0.2% from 0.4% also below market expectations of 0.5%. This was the lowest core reading since the Euro was introduced and will reinforce pressure for the ECB to take additional action to underpin both reported inflation and inflation expectations. The end of the week resulted in some unexpected news as President Trump released the news that he and the first lady had contracted COVID. Concerns heightened over the weekend as they were taken to hospital. News has since been inconsistent. The market will be focused on when he is discharged (rumoured to be early this week) and what the potential implications are on the next TV debate, voting behaviours and the net impact on the election. Looking to the week ahead, the market will be once again focused on Brexit trade talk developments as we approach the EU summit on the 15th of October. In the meantime, the situation surrounding President Trump

2020-10-05T13:38:51+00:00October 5th, 2020|