Blog > February 2017
With a bit of advance planning, there is no reason why anyone should pay much more than the interbank sterling-euro rate for their travel money.
Look over a recent market survey conducted by Fair FX.   Be careful out there.  Contact before you travel.
Travel money provider Spread over interbank rate for euros on £1,000 transaction* 
Moneycorp, Bristol Airport 14% 
ICE, Birmingham Airport 13% 
Travelex, Manchester airport 13% 
Moneycorp, Stansted airport 13% 
Travelex, Heathrow airport 12% 
ICE, Gatwick airport 10% 
Barclays branch, central London 5% 
Lloyds branch, central London 4.5% 
NatWest branch, central London 4.5% 
HSBC branch, central London 2.2%  
Source: Fair FX/FT Money research  
Posted: 2/27/2017 2:11:09 PM by johnmin | with 0 comments

What has caught analyst attention of late has been the inability of the US Dollar to rally, despite data prints confirming the US economy to be in rude health.

This has ensured that the Dollar has not been able to drive the likes of EUR/USD and GBP/USD lower while at the same time maintaining just enough strength to ensure upside is limited.

Citi cite insufficient hawkishness or rate hike intention at the US Federal Reserve and the US Dollar being previously overbought by investors as reason for the currency’s lacklustre display.

However, in the medium- and long-term, increasing fiscal policy and hike rates by the Fed are likely to push the USD higher. 

Two Reasons to be Bullish on the US Dollar:

  1. Increasing fiscal spending: Trump advocates increasing fiscal spending and infrastructure and tax cuts, which may underpin US and global economy. It may make the Fed tighten monetary policy more quickly, which may support USD.
  2. Fund inflows into the US: US corporations have around $1.2 trillion overseas. If Trump cuts corporate tax, fund inflows back into the US may underpin USD.

USD may have 6% upside against major currencies for the coming 6-12 months.

With rising political risk in Europe and USD likely to strengthen in the medium and long term, Citi say the EUR may be undermined.

EUR may drop to 0.98 for the coming 6-12 months.

Meanwhile, GBP may be undermined amid large UK fiscal and current account deficits and as the Bank of England may not hike rates until late 2019.

"GBP/USD may drop to 1.15 for the coming 6-12 months," say Citi.

Posted: 2/21/2017 1:48:19 PM by johnmin | with 0 comments

3 Reasons Why the Euro May Go Lower...

  • High political (election) risks
  • Low Euro interest rates and dovish ECB
  • Stronger US economy after Trump's tax cut (expected)

At surface level, outlook for the Euro seems to be decidedly more complicated than most of its G10 counterparts.

Political risk abounds. Populist forces look uncharacteristically strong ahead of key elections in Germany, France and the Netherlands. Italy may yet see an early election against a similar backdrop.

Meanwhile, the start of Brexit negotiations looms ever closer. 

Finally, there is the dramatic shift in the tone of US policy with the ascension of President Donald Trump.

The new administration has expressed its displeasure with what it sees as an unfairly weak Euro and clashed with ECB President Mario Draghi about post-crisis banking regulation.

All that political uncertainty means the ECB is unlikely to change its dovish tune any time soon.

Meanwhile, it seems clear that the Fed is aiming to raise rates, even if the extent of on-coming tightening is clouded amid lingering fiscal policy uncertainty.

Semi-annual Congressional testimony from Fed Chair Janet Yellen may be a more potent catalyst. The Euro may get a lift if a cautious tone trims March rate hike bets. Follow-through may be limited however considering the priced-in probability of an increase is relatively modest at 28 percent.

On balance, an ultimate failure to dislodge the big-picture status quo is likely to bode ill for the single currency. Short-term price swings aside, there seems to be relatively little on offer in the days ahead that has real potential to divert the underlying, yields-based trend.

Expect the Euro to go lower in the coming weeks.

John Min

Posted: 2/13/2017 8:21:48 AM by johnmin | with 0 comments

Last summer, in the weeks after the referendum, talk of the UK falling into recession was rife. Economists including myself slashed UK growth forecasts.

By August economists expected GDP growth would fall away in the second half of 2016 as Brexit hit home. They saw the UK eking out meagre growth of less than 1.0% in 2017, the slowest since the recession in 2009.

Instead, the market has so far surprised everyone ths year!  The UK economic activities accelerated from the middle of last year and for 2016 as a whole GDP growth came in at 2.0%, the best of any major industrialised nation. (Even beat out the good old USA.)

UK consumers kept spending and borrowing in the second half of 2016 and the services sector saw good growth.

Last autumn the focus of market concern shifted to 2017 and three Brexit-related risks – from higher inflation hitting consumer spending, the effects of uncertainty on business investment and, in March, the triggering of Article 50.

And yes - these risks remain, but the scale of the threat they pose has much reduced.

Posted: 2/6/2017 2:12:43 PM by johnmin | with 0 comments