外汇资讯


Budget Reaction From RABMARKETS

As the Chancellor announces the minting of a new one pound coin the most important thing people living in the UK will be asking, “that’s all very well, but what will it do for the pound in my pocket”. The overall theme of this year’s Budget was one of cautious optimism and the word “resilient” featured regularly.

 

Bank Of England Keeps Digging

The Bank of England is in a hole and instead of climbing out, it has continued to dig. Recall, when forward guidance was introduced 6 months ago, there were several knock-outs, which allowed the Bank ‘wiggle room’ around its new 7.0% threshold level on the unemployment rate, above which rates would continue to be kept low. Six months on, with unemployment having moved close to the 7.0% level far faster than anyone anticipated, the Bank has introduced a lot more complexity to the policy outlook.

 

| Not Going To (The Dollar) Plan

Once again, the consensus on FX is struggling to be proven correct and there are strong echoes of six months ago. Back in early July, the Fed tapering story was gathering pace. Partly in response, the Bank of England (in one of the new governor’s first acts) actively warned against rising rate expectations spilling over into the UK money markets. A month later, the Bank announced explicit and condition forward guidance. Also in July, the ECB announced that rates would remain low “for an extended period of time”.

 

Sterling In 2014 - Good And Bad

The story of sterling is familiar to all, namely one of continued disappointment on growth (lower) and inflation (higher) weighing on its shoulders. This started to turn in the twilight of Mervyn King’s tenure at the Bank of England, with growth for the year seen around 1.5% (expectation was for 0.8% back in May).

 

The Euro – Defying Expectations

Leaving aside events in Cyprus earlier in the year, this was the first year since the Greek bailout in 2010 that the single currency was not jumping from crisis to crisis. In the background, Draghi’s infamous pledge to do “whatever it takes” in the summer of 2012 (backed up with the OMT programme) provided a strong structural support to the euro. It meant that the market could move on from obsessing about Italian and Spanish bond yields.