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The pound-to-US dollar rate remains virtually unchanged from yesterday
Things were muted in the world of foreign exchange yesterday, primarily the result of scarce economic data. Sterling treaded water against the euro and the US dollar, while EUR/USD lost a measly 0.1% over the course of Monday.
One place that certainly wasn’t quiet was our Hammersmith office. Over the weekend, Smart Currency Group won Finance Company of the Year at the West London Business Awards 2024, an achievement we are immensely proud of given the strength of competition and the crowded West London field. After all, West London has a higher economic output than Birmingham and Leeds combined, so being recognised in this category for the fourth consecutive year is a major honour. But anyway, enough about us and back to our scheduled programming.
Israel’s economy has shrunk by 20% since the beginning of its war with Hamas. GDP plummeted as Israel diverted funds to its military operations, as well as the country calling up 300,000 reservists. The Israeli shekel lost 0.8% against the US dollar yesterday as markets digested the news.
Former Bank of England chief economist Andy Haldane waded into the discussion on interest rates yesterday. Current governor Andrew Bailey may not exactly be thanking his former colleague for the intervention though, as Haldane said holding interest rates for much longer might “crush the economy”.
In its monthly report, Germany’s Bundesbank warned that the German economy would shrink in the first quarter of 2024. Germany was already the G7’s worst performing economy in 2023 and the latest news is another blow moving forward.
In a development that may yet shift the dial in the price of oil, Houthi militants have launched a damaging attack on a cargo ship in the Red Sea. The crew of the Bulgaria-bound vessel were forced to abandon ship after being struck.
Attention shifts today to a speech by Andrew Bailey (and potentially a rebuttal to Andy Haldane’s comments), along with some intriguing figures out of Japan. Things really start to get going towards the middle of the week, so it might be worth thinking about locking in your next transaction before the next wave of uncertainty hits markets.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Cheers, Andy
Andrew Bailey probably has enough to worry about without former policymakers weighing in on policy. Bailey’s namesake took to the airwaves on Monday to warn about the impact of high interest rates on the UK economy. It’s an argument that deserves to be heard, but one Bailey may wish was left for the the broader commentariat to advance.
GBP/USD: the past year
EUR: Spanish confidence up
It was a distinctly quiet day for eurozone data, but Spanish consumer confidence did rise slightly in January, along with a slight widening of the country’s trade deficit.
GBP/EUR: the past year
USD: Holiday calm
Federal employees in the US were celebrating a holiday yesterday (Presidents’ Day), hence the lack of activity on the other side of the Atlantic. When markets return today, they will no doubt have Wednesday’s FOMC minutes circled in their calendars as this week’s main event.
USD/EUR: the past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 7898 0500 or your Private Client Account Manager on 020 7898 0541.
