news archive


Is ‘long GBP’ the new ‘short EUR’?

As an increasing number of market commentators switch their GBP forecasts from bearish to bullish, we look back and explain why the consensus view isn’t always the best indicator of what is likely to happen in the markets.



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Sterling’s Ticking Time Bomb…

The UK’s current account balance is now approaching a record low. In fact, in the second half of 2013, the deficit was the biggest for any six-month period since World War II.



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Central Banks causing confusion…

After last month’s Fed meeting, markets had begun pricing in an increased probability of a sooner than expected rate hike. However, the minutes from the meeting, revealed last week, suggested that this is unlikely to be the case. In this week’s report, we take a closer look at what these fluctuating expectations mean for the financial markets in the short term before considering the longer term implications of such extreme policy measures.



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The €1 Trillion Question…

There are two ways to interpret the ECB’s statement (and modelling exercise):
1. Take it at face value, as a statement of intent to launch a European QE programme imminently; or
2. Treat it with a healthy dose of scepticism, as simply another attempt to talk down the value of the Euro.



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2014 1st Quarter FX Update

Looking at the first quarter and evaluating our forecasting performance to date… .



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Dollar rises as Yellen hints at tighter policy

Last week, Fed officials revised their median forecasts for the Fed Funds rate in December 2015 from 0.75% to 1%. Meanwhile, the median forecast for December 2016 was revised from 1.75% to 2.25%. In this week’s edition of Risk Insight, we take a closer look at what this and George Osborne’s UK budget means for the GBP/USD exchange rate.



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The Yuan and FX Volatility

The Chinese central bank widened the Yuan’s trading band on Saturday. Could increased USDCNY volatility lead to a more generalized Volatility spike?



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Is the emerging market turmoil a cause or a consequence of financial instability?

The shift of capital from high-volatility emerging currencies to low-volatility developed currencies stirred panic in financial markets as concerns over economic recovery materialised. However, was the emerging market turmoil a cause or a by-product of financial instability? More importantly, will the volatility in the emerging market currencies spill-over to the West and destabilise the economic recovery?



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Is the euro rally about to run out of steam?

In our view, a valuation ‘premium’ on the euro (against both the USD and GBP) is appropriate, due a combination of fundamental and monetary factors which support the single currency. However, we recognise that this valuation premium is limited, and from a historical perspective, we may be approaching this limit… .



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Going forward…

Mark Carney and Janet Yellen have embarked on Round 2 of Forward Guidance with some interesting differences in their respective approaches. What are the implications for GBPUSD?



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