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|

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|

Sterling Faces Dual Risk of Brexit and Potential COVID Restrictions

Last week, sterling price action highlighted its sensitivity to both Brexit and negative interest rate news. The currency started the week on the backfoot as the Internal Market Bill was discussed in the House of Commons where it was highlighted that if passed, the UK has the ability to break international law. This came under criticism from all the living past Prime Ministers and was even attacked by US Presidential Candidate Biden. However, the rhetoric softened as PM Johnson meet with backbenchers and EC President Ursula von der Leyen stated that she felt a deal was still possible. Meanwhile, both the FOMC and BOE met to deliver their latest interest rate policy and relay their thoughts on economic policy. In the US, the Fed’s amendments to its policy guidance talked about allowing inflation to move “moderately” above target for “some time” before it will raise interest rates with the majority touting at least 2023 before interest rates are increased. In the UK, the BoE stipulated the possibility of negative interest rates, increasing the probability they give to a move below zero in 2021 pushing Sterling lower at the time. Concerns of UK economic growth were further compounded as the pace of expansionary data slowed and new COVID cases in the UK remained on an elevated path. Local lockdowns were implemented with concerns of more widespread consequence amidst the ongoing testing capacity debacle. Looking to the week ahead, Brexit and COVID headlines will continue to dominate. Informal talks between the

2020-09-21T11:53:16+00:00September 21st, 2020|

Points to Consider Before FX Hedging in COVID-19 Conditions

By Jamie Jemmeson ACSI, MSTA at Infinity International Introducing the 4 questions you should start with... Prime Minister Boris Johnson announced recently that non-essential shops in England can reopen from 15 June, rates of infection permitting. This now puts businesses in the unenviable place of second-guessing what sentiment and confidence may look like and the resulting sales and inventory requirements. Business conditions remain fragile, despite a loosening of restrictions, it is unlikely to represent “business as usual” as we all continue to adapt to the ever-changing environment. With many still questioning whether a “second wave” emerges or not, makes it incredibly difficult to answer those FX hedging questions of “how much do we hedge; how long do we hedge for and when?” The key question to answer and understand is “what is the purpose of business hedging” and may now be the time as we ease out of this unprecedented crisis to re-assess some previously held views/policies. We have complied a few questions that you might wish to consider before executing a FX hedge or developing a hedging policy in these conditions. Over the next few weeks we will unpack each of the 4 questions, which are: 1. Understand your FX exposure Has your FX exposure changed – are you now using different suppliers/has your customer base changed focus geographically? Do you have line of sight on your currency requirements and what are the terms associated with your upcoming invoices? 2. What impact will hedging potentially have on the

2020-08-12T12:00:02+00:00June 2nd, 2020|

UK Continues to Debate Negative Rates, Cummings and Further Relaxing of Restrictions

Last week, Sterling remained resilient despite being under pressure. The topic of negative interest rates continues to dominate the market concerns for the UK. During a testimony to the Treasury Select Committee, Governor Bailey stated that the bank does not rule out any instrument in principle. Bailey stated that a move to negative interest rates was not ruled in or out and the evidence would have to be considered closely. This resulted in in the latest UK government 3-year bond auction recording a negative yield for the first time on record. This comes while in the US, the minutes from April’s Federal Reserve meeting reiterated that it was committed to using all available tools to support the economy but there was no support for negative interest rates. Over the weekend and during the bank holiday (UK & US) on Monday we have seen several developments from the UK.  Focus was firmly on the actions and reactions of Government regarding Dominic Cummings. Many are still calling for his resignation so the pending pressure over the next few days could be interesting especially as the UK heads toward the deadline for an extension in trade talks at the end of June. During yesterday’s Covid-19 briefing, PM Johnson stipulated that non-essential shops in England can reopen from 15 June, rates of infection permitting. Outdoor markets and car showrooms can open from 1 June. Yesterday with Europe open, we saw some more positive data from Germany. German business sentiment rose in May, beating

2020-06-22T15:06:43+00:00May 26th, 2020|

Market Weathers Weak Data Readings as it Waits for the Monthly US Labour Data on Friday

Last week was a calmer week in turns of economic data. Whilst economic readings remains to the downside, the market has been prepared to weather very weak near-term economic data, with the hope that the second half of the year bounces back as lockdown restrictions ease. GDP data from both the US and Eurozone were released with both regions producing negative readings (-4.8% and -3.8% respectively). However, as the lockdown effectively came late in the quarter, the market had already turned focused to the reading for Q2. The data focus for the week was once again on the US weekly jobless claims ahead of this week’s government labour data. The headline figure showed that 3.8m Americans filed new claims for unemployment benefits last week, bringing the six-week total since the start of the lockdowns to more than 30m. In the meantime, the market continues to focus on economic readings from China as they emerge from lockdown. The April data was mixed as manufacturing PMI fell, and non-manufacturing rose, however both readings were in expansionary territory. The ECB meeting also took place last week, where they added to its previous measures by launching another lending scheme and lowering the interest rate on one of its existing schemes. More importantly for the markets is the promise from the central banks that policy will continue to be very loose for a long period of time. Looking to the week ahead, the UK has a shortened week ahead of VE Day, but the

2020-05-04T14:31:16+00:00May 4th, 2020|