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ABOUT MERIDIAN

 * > Working with Meridian has been so easy, after a long, drawn-out process
   > with traditional banks they made everything so simple. I would recommend
   > them to any business, especially if you are new to the UK.
   
   Joanna Lyall, Country Manager UK, Freeda Media

 * > Meridian go above and beyond for us time and again. Seamless operations,
   > great to deal with and I know my business interests are their number one
   > priority. I can't recommend them highly enough.
   
   Sally Hayden, Director, Putoline Distribution

 * > If any financial company worked like Meridian, the world would be a much
   > better place!
   
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 * > Working with Meridian has been so easy, after a long, drawn-out process
   > with traditional banks they made everything so simple. I would recommend
   > them to any business, especially if you are new to the UK.
   
   Joanna Lyall, Country Manager UK, Freeda Media

 * > Meridian go above and beyond for us time and again. Seamless operations,
   > great to deal with and I know my business interests are their number one
   > priority. I can't recommend them highly enough.
   
   Sally Hayden, Director, Putoline Distribution

 * 
 * 
 * 






LATEST NEWS

 * Oct 26, 2022
   
   
   USD FALTERS AS FED RATE HIKES EXPECTATIONS DROP. GBP UP AS RISHI BECOMES PM
   
   The USD has weakened heavily over the past 24 hours as investors pull back on
   their expectations for future aggressive rate hikes from the Federal Reserve.
   Although the market still expects another 0.75% hike from the Fed next week,
   a recent report from the Wall Street Journal suggests that some Fed
   policymakers have started to consider reducing the pace of hikes from
   December. Weaker data out of the US on Monday (PMIs) and again yesterday
   (housing and consumer confidence figures) is only likely to give further
   justification to Fed members to wind back on their current aggressive hiking
   cycle. This has led to a drop in US treasury bond yields and a large sell off
   in the Dollar. In other news, the Pound has been supported by the appointment
   of Rishi Sunak as the new Prime Minister. Whilst this was widely anticipated,
   particular after Boris Johnson pull out of the race on Sunday, UK assets have
   generally been buoyed by the news amid improved political certainty and a
   perceived steady pair of hands. The markets will now await to see the full
   details of their updated fiscal plans and it’s just been announced that this
   will now be delayed until the 17th November (from 31st Oct). This might make
   next week’s BoE meeting less exciting, as they won’t be able to include the
   government’s fiscal plans into their forecasts and outlook. As a result, the
   GBP/USD has bounced around 3-cents higher this week and it now trades around
   a 6-week high. The EUR/USD has hit above parity again for the first time in
   5-weeks and the GBP/EUR is buoyant and trading close to the top of the range
   we’ve seen over the past couple of months. The market will now turn their
   attention to tomorrow afternoon’s ECB interest rate meeting and a raft of US
   data releases (GDP, durable goods, and jobless claims). The ECB are expected
   to hike by 0.75%, however it’s likely the accompanying statement and Q/A
   session from the ECB President will create the most volatility. Watch this
   space.
   
   READ MORE
 * Oct 21, 2022
   
   
   VOLATILITY REMAINS IN POUND AS TRUSS RESIGNS, BOE DAMPEN EXPECTATIONS, AND
   RETAIL SALES DISAPPOINT
   
   The resignation of Liz Truss as UK prime minister has created another
   eventful 24-hrs in UK politics which has dominated the recent headlines in FX
   markets. Sterling initially moved higher on the news and it had pushed up by
   more than 1% against the USD at one point. This was seen as a bit of a relief
   after her disastrous mini- budget a few weeks earlier sent UK financial
   markets into turmoil. The Pound has since given back these gains as the UK
   political uncertainty remains with the Tory party starting the search for
   their new leader which should be announced in a week’s time. Rishi Sunak and
   Penny Mordaunt are the current front-runners and there’s even reports that
   Boris Johnson might attempt to achieve another stint as PM. The markets have
   also been reducing their Bank of England rate hike expectations as well,
   which has further reduced the appeal of Sterling. Markets had been pricing in
   a 1.25% hike for November’s meeting but this has since reduced to barely a
   0.75% hike. Further support for these dampened BoE expectations came from
   this morning’s latest UK retail sales figures which heavily disappointed at
   -1.5% vs an expected -0.3% month on month (-6.2% vs expected 4.1% year on
   year). This data suggests that consumers are feeling the pinch from the
   cost-of-living crisis and high inflation. As a result, the GBP/USD is down
   around 3-cents from Monday’s high and currently trades at an 8-day low. The
   GBP/EUR is down over 2-cents from Monday’s high and also trading around an
   8-day low.
   
   READ MORE
 * Oct 3, 2022
   
   
   GOVERNMENT U-TURN ON SCRAPPING 45% INCOME TAX RATE BOOSTS POUND
   
   Sterling has reclaimed its pre-“mini budget” levels this morning after the UK
   government announced a U-turn on scrapping the 45% income tax rate. The
   government have faced major backlash since announcing the largest tax cuts in
   50 years which sent UK financial markets into turmoil and the Pound to a
   record low against the USD. This U-turn is being seen as a potential first
   step in regaining confidence into the UK markets, which has boosted the Pound
   this morning. It’s worth noting, however, that scrapping the 45% income tax
   band only accounted for £2 billion of the total £45 billion tax-cutting plan.
   Therefore, it’s likely the markets will still want to see further evidence
   over how they’re going to fund the rest of their planned tax cuts/stimulus
   package and that these aren’t over inflationary or damaging to the economy.
   Otherwise, further changes to their plans may also help stabilise UK asset
   markets. As a result, the GBP/USD jumped nearly 2-cents higher from this
   morning’s low and it now sits around the highest levels since 23rd September.
   The GBP/EUR is up a cent and also back up to the highest levels since the
   23rd September.
   
   READ MORE
 * Feb 21, 2023
   
   
   STERLING RECOVERS FOLLOWING UPBEAT PRIVATE SECTOR DATA FOR FEB
   
   The Pound has strengthened this morning following better-than-expected
   private sector UK services and manufacturing data. The PMI composite figure
   showed a strong rebound this month coming in at 53.0 versus forecasts for
   48.7 (and last month’s 48.5). This has reduced the market odds of a near-term
   recession and a (seemingly) robust UK private sector should give BoE
   policymakers more confidence in raising interest rates further by reducing
   fears of this creating a deep recession. As a result, the GBP/EUR is up
   nearly 0.9% today and now sits at the highest levels in February. The GBP/USD
   has recovered nearly 1% since the data release but remains relatively subdued
   due to the more recent independent strength in the USD. Next up, we have the
   US PMI figures for services and manufacturing and then Fed Minutes tomorrow
   night. Then on Thursday we see the latest Eurozone (CPI) inflation and US GDP
   figures.
   
   READ MORE
 * Feb 2, 2023
   
   
   BOE HIKES RATES 0.5% BUT HINTS NEARING THEIR PEAK
   
   Sterling has weakened this afternoon following the latest Bank of England
   interest rate meeting. As expected, the Central Bank voted to increase
   interest rates by 0.5% to 4%, however, this was a dovish rate hike with
   Governor Bailey striking a cautious tone about the future. The vote was split
   7-2, with two members voting for no rate hike at all, and this appears to
   indicate that the committee are moving closer to pausing their rate hike
   cycle. Their language also appeared to suggest that if they do hike at their
   next meeting then it will be a smaller (0.25%) one. They lowered their
   inflation forecasts and now expect inflation to move to under 4% by the end
   of this year (versus previous expectations for 5%). Although they believe the
   UK recession will be shallower than previously anticipated, they’re still
   referring to the R-word in their correspondence which contrasts with other
   major central banks including the Fed and ECB. I guess it’s no wonder as the
   UK is currently facing some major headwinds including the ongoing strikes,
   Brexit Northern Ireland Protocol issues, sluggish growth, and negative
   forecasts from the IMF to name a few. Across the pond, the USD was sold
   overnight after the Federal Reserve voted to raise interest rate by 0.25% and
   Fed Chairman acknowledged the disinflation in goods is picking up. It appears
   to the markets that the aggressive rates hikes made by the Fed are now
   seeping into the economy and starting to reflect in prices. In contrast, the
   ECB are continuing to play catch up on inflation/rate hikes and they’ve just
   voted to raise rates by another 0.5% (with suggestions they’ll repeat this
   hike at their next meeting). This has created increased flows out of the USD
   and into the Euro (but less so into GBP for the above reasons). As a result,
   the GBP/EUR hit a 4-month low this afternoon having lost around 2.5 cents
   from last week. The GBP/USD lost a cent from this morning but still trades
   around relatively buoyant levels. The EUR/USD touched market levels over 1.10
   which represents a 9-month high.
   
   READ MORE
 * Jan 6, 2023
   
   
   HAPPY NEW YEAR
   
   Happy New Year! We hope you had a lovely break and wish you a happy and
   healthy 2023. High volatility in the FX markets continued into the end of
   2022 and, even after just a few days of the new year, it appears this theme
   may continue into 2023. Last year, as the world began to emerge from the
   Covid pandemic and Russia started it’s invasion on Ukraine, surging inflation
   and the consequential unprecedented interest rates that followed took centre
   stage in global financial markets. Focus is likely to remain on inflation and
   what impact the aggressive interest rate hikes are having on this and
   countries economic growth. Only time will tell on how well the major central
   banks have dealt with this balancing act and we should start to get a good
   picture over the coming year. The Russian invasion on Ukraine has had a
   significant impact on riskier currency assets, such as the Pound. It
   triggered the major move lower in the GBP/USD which traded comfortably over
   1.30; a move lower which ultimately ended in a record low in GBP/USD
   following the disastrous mini-budget from Liz Truss’ short lived reign as PM.
   Unfortunately, as things stand, it appears that this war will continue for
   the foreseeable future, however developments will be closely watched for any
   signs of peace or escalation and risk assets will act accordingly. China’s
   zero-covid policy continued to damage global supply chains and heavily impact
   on inflation throughout 2022 with whole regions being shut down for extended
   periods of time. They now appear to be moving away from this policy and
   opening back up to the world. This should help improve the supply of goods
   around the world and make a heavy contribution towards bringing inflation
   down. Sterling made a good recovery after Liz Truss exited as prime minister
   with Sunak providing a more stable political environment helping to boost
   investor confidence in the UK. However, the UK economy remains very fragile
   with many headwinds (including the cost of living crisis, Northern Ireland
   Brexit negotiations etc) and the Pound has given back a lot of the ground it
   made during the first half of December. Traders will be closely watching the
   key UK economic data releases to assess how well the UK economy is doing and
   therefore how long they should be on the Pound. Across the pond, the US
   Dollar continues to trade strongly. Last year, we saw the USD largely benefit
   from risk flows from the Ukraine war and global economic crisis, along with a
   very hawkish Federal Reserve hiking interest rates to over 4%. On the
   surface, it seems the Fed’s aggressive response to hiking rates is beginning
   to pay dividends, as US inflation has seen a retreat in the last two postings
   and is expected to continue to cool down. Some questions are how much further
   do the Fed need to go with their rate hike cycle and are they going too far
   and risking a major pullback in growth. Certainly the employment market in
   the US seems robust and continues to surprise, with no lack of slowdown
   taking place in the number of new jobs being created. Closer to home, the
   Euro saw a year of large depreciation in 2022 and eventually went under
   parity against the USD. Like the Pound, the Euro was heavily affected via the
   Russia-Ukraine war, where we see still see the pipeline embargo bubble away
   in the background. Furthermore, unlike the US, the ECB reacted quite late to
   rising inflation in a failed hold-off approach. As a result, their delayed
   reaction to rising inflation saw prices skyrocket to double figures. However,
   once the penny dropped with the ECB, they also became aggressive with their
   rate hikes which helped bring the EUR/USD back over parity and up to around
   1.07 at the turn of the year. There’s a good chance that the ECB will have to
   continue with some heavy rate hikes this year, which might provide some short
   term support, although the ECB have a fine balancing act to also not rumble
   struggling growth and delicate peripheral bond markets. As a result, the
   GBP/USD now trades around a 6-week low and has lost around 2-cents this week
   (and around 5.5 cents from December’s high). The GBP/EUR touched around the
   lowest levels in 3-months and continues to remain subdued around these
   levels. The EUR/USD trades around a 4-week low after losing around 2-cents
   from the start of this new year. On the immediate horizon we have US non-farm
   payroll figures out this afternoon and we will keep you updated on any major
   news.
   
   READ MORE
 * Nov 24, 2022
   
   
   USD CONTINUES TO SOFTEN FOLLOWING LATEST FED MEETING MINUTES
   
   The Pound has continued its strong recovery against the USD following weaker
   than expected US data and dovish Federal Reserve minutes. The latest PMI
   readings from the US, which is forward-looking data, missed expectations
   yesterday afternoon which led to another move lower in the Dollar yesterday.
   This move was amplified overnight following the release of the latest Federal
   Reserve meeting minutes. Overall, the minutes showed clear dovish tones from
   the Fed with regards to future interest rate hikes. Whilst some Fed members
   proposed waiting on the results of upcoming inflation figures before slowing
   down hikes, others claimed that continuing to raise rates could become
   disadvantageous for the US economy by exceeding requirement. However, what
   was agreed by most members was that “a slowdown in hikes would likely seem
   appropriate”. After this meeting occurred, US inflation data missed
   expectations which triggered the current move lower in the USD; these minutes
   only lend further support to the idea the Fed are nearing the end of their
   aggressive rate hiking cycle. Consequently, the USD has become less
   attractive to investors seeking higher yields. As a result, the GBP/USD has
   rallied over 1.8% from yesterday’s low and now trades at a 14-week high. The
   EUR/USD has also continued to climb and has pushed up over 1% from yesterday,
   which takes it to a 9-day high and not far off the highest levels since early
   July.
   
   READ MORE
 * Nov 10, 2022
   
   
   DOLLAR CAVES AS US INFLATION MISSES EXPECTATIONS
   
   The USD has crumbled following the release of softer than expected US
   inflation data. US Consumer Price Index readings came in at 7.7% versus an
   expected 8.0% year-on-year. This is potentially a sign the aggressive rate
   hikes from the Federal Reserve are starting to take bite on US inflation and
   traders are predicting the Fed will slow down the pace of their rate hikes.
   Consequently, we’ve seen a big move out of the USD. The Dollar has been on a
   massive rally this year and USD long trades (i.e. buy USD trades) the
   most-crowded trade in the world. Now, with interest rates getting closer to
   their expected peaks, the Dollar is particularly vulnerable to any negative
   data that comes out and today’s data miss is an example of this. As a result,
   the GBP/USD has rallied up 2% today and has touched an 8-week high. The
   EUR/USD has bounced over 1% today and now trades back above parity and at an
   8-week high. The GBP/EUR has reclaimed yesterday’s losses and remains at
   elevated levels. Next up is UK growth data (GDP) out tomorrow morning.
   
   READ MORE
 * Nov 3, 2022
   
   
   DOLLAR RALLIES AS POWELL STATES TOO PREMATURE TO PAUSE RATE HIKES
   
   The USD has rallied overnight and through this morning following the latest
   Federal Reserve interest rate meeting. As widely expected, the Fed announced
   a fourth consecutive 0.75% rate hike, taking US interest rates up to 3.75-4%,
   but the accompanying press conference from Chairman Powell was unexpectedly
   hawkish. Recently, many market analysts had expected the Fed to be reaching a
   turning point in their aggressive rate hiking cycle, however, Powell stated
   that they cannot be too premature in pausing rate hikes just yet and
   signalled that further large hikes may on the cards to subdue the ongoing
   inflation. This has led to a move back into the US dollar. In other news,
   Sterling has lost ground this morning ahead of this afternoon’s Bank of
   England interest rate decision. Generally, markets have been expecting a
   0.75% hike, however, we’ve seen some cautiousness amongst traders this
   morning and rumours that, due to the stabilisation of the UK political
   environment, they might opt for a more cautious 0.5% hike instead.
   Policymakers will also have to wait until later this month to see the Autumn
   budget from Jeremy Hunt and Rishi Sunak before they can properly adjust their
   forecast and outlook. As a result, the GBP/USD is down over 2% from
   yesterday’s high and now trading close to a 2-week low. The GBP/EUR lost
   around 1-cent and now trades around a 1-week low. The EUR/USD is 1.5-cents
   lower from yesterday and also trades close to a 2-week low. Traders will have
   a keen eye on the outcome of today’s BoE rate hike decision and importantly
   the voting pattern and press conference that accompanies the decision. This
   will provide them with further direction on where to take the Pound. Then
   tomorrow focus will shift across the Pond to the latest non-farm employment
   figures out the US.
   
   READ MORE
 * Oct 26, 2022
   
   
   USD FALTERS AS FED RATE HIKES EXPECTATIONS DROP. GBP UP AS RISHI BECOMES PM
   
   The USD has weakened heavily over the past 24 hours as investors pull back on
   their expectations for future aggressive rate hikes from the Federal Reserve.
   Although the market still expects another 0.75% hike from the Fed next week,
   a recent report from the Wall Street Journal suggests that some Fed
   policymakers have started to consider reducing the pace of hikes from
   December. Weaker data out of the US on Monday (PMIs) and again yesterday
   (housing and consumer confidence figures) is only likely to give further
   justification to Fed members to wind back on their current aggressive hiking
   cycle. This has led to a drop in US treasury bond yields and a large sell off
   in the Dollar. In other news, the Pound has been supported by the appointment
   of Rishi Sunak as the new Prime Minister. Whilst this was widely anticipated,
   particular after Boris Johnson pull out of the race on Sunday, UK assets have
   generally been buoyed by the news amid improved political certainty and a
   perceived steady pair of hands. The markets will now await to see the full
   details of their updated fiscal plans and it’s just been announced that this
   will now be delayed until the 17th November (from 31st Oct). This might make
   next week’s BoE meeting less exciting, as they won’t be able to include the
   government’s fiscal plans into their forecasts and outlook. As a result, the
   GBP/USD has bounced around 3-cents higher this week and it now trades around
   a 6-week high. The EUR/USD has hit above parity again for the first time in
   5-weeks and the GBP/EUR is buoyant and trading close to the top of the range
   we’ve seen over the past couple of months. The market will now turn their
   attention to tomorrow afternoon’s ECB interest rate meeting and a raft of US
   data releases (GDP, durable goods, and jobless claims). The ECB are expected
   to hike by 0.75%, however it’s likely the accompanying statement and Q/A
   session from the ECB President will create the most volatility. Watch this
   space.
   
   READ MORE
 * Oct 21, 2022
   
   
   VOLATILITY REMAINS IN POUND AS TRUSS RESIGNS, BOE DAMPEN EXPECTATIONS, AND
   RETAIL SALES DISAPPOINT
   
   The resignation of Liz Truss as UK prime minister has created another
   eventful 24-hrs in UK politics which has dominated the recent headlines in FX
   markets. Sterling initially moved higher on the news and it had pushed up by
   more than 1% against the USD at one point. This was seen as a bit of a relief
   after her disastrous mini- budget a few weeks earlier sent UK financial
   markets into turmoil. The Pound has since given back these gains as the UK
   political uncertainty remains with the Tory party starting the search for
   their new leader which should be announced in a week’s time. Rishi Sunak and
   Penny Mordaunt are the current front-runners and there’s even reports that
   Boris Johnson might attempt to achieve another stint as PM. The markets have
   also been reducing their Bank of England rate hike expectations as well,
   which has further reduced the appeal of Sterling. Markets had been pricing in
   a 1.25% hike for November’s meeting but this has since reduced to barely a
   0.75% hike. Further support for these dampened BoE expectations came from
   this morning’s latest UK retail sales figures which heavily disappointed at
   -1.5% vs an expected -0.3% month on month (-6.2% vs expected 4.1% year on
   year). This data suggests that consumers are feeling the pinch from the
   cost-of-living crisis and high inflation. As a result, the GBP/USD is down
   around 3-cents from Monday’s high and currently trades at an 8-day low. The
   GBP/EUR is down over 2-cents from Monday’s high and also trading around an
   8-day low.
   
   READ MORE
 * Oct 3, 2022
   
   
   GOVERNMENT U-TURN ON SCRAPPING 45% INCOME TAX RATE BOOSTS POUND
   
   Sterling has reclaimed its pre-“mini budget” levels this morning after the UK
   government announced a U-turn on scrapping the 45% income tax rate. The
   government have faced major backlash since announcing the largest tax cuts in
   50 years which sent UK financial markets into turmoil and the Pound to a
   record low against the USD. This U-turn is being seen as a potential first
   step in regaining confidence into the UK markets, which has boosted the Pound
   this morning. It’s worth noting, however, that scrapping the 45% income tax
   band only accounted for £2 billion of the total £45 billion tax-cutting plan.
   Therefore, it’s likely the markets will still want to see further evidence
   over how they’re going to fund the rest of their planned tax cuts/stimulus
   package and that these aren’t over inflationary or damaging to the economy.
   Otherwise, further changes to their plans may also help stabilise UK asset
   markets. As a result, the GBP/USD jumped nearly 2-cents higher from this
   morning’s low and it now sits around the highest levels since 23rd September.
   The GBP/EUR is up a cent and also back up to the highest levels since the
   23rd September.
   
   READ MORE
 * Feb 21, 2023
   
   
   STERLING RECOVERS FOLLOWING UPBEAT PRIVATE SECTOR DATA FOR FEB
   
   The Pound has strengthened this morning following better-than-expected
   private sector UK services and manufacturing data. The PMI composite figure
   showed a strong rebound this month coming in at 53.0 versus forecasts for
   48.7 (and last month’s 48.5). This has reduced the market odds of a near-term
   recession and a (seemingly) robust UK private sector should give BoE
   policymakers more confidence in raising interest rates further by reducing
   fears of this creating a deep recession. As a result, the GBP/EUR is up
   nearly 0.9% today and now sits at the highest levels in February. The GBP/USD
   has recovered nearly 1% since the data release but remains relatively subdued
   due to the more recent independent strength in the USD. Next up, we have the
   US PMI figures for services and manufacturing and then Fed Minutes tomorrow
   night. Then on Thursday we see the latest Eurozone (CPI) inflation and US GDP
   figures.
   
   READ MORE
 * Feb 2, 2023
   
   
   BOE HIKES RATES 0.5% BUT HINTS NEARING THEIR PEAK
   
   Sterling has weakened this afternoon following the latest Bank of England
   interest rate meeting. As expected, the Central Bank voted to increase
   interest rates by 0.5% to 4%, however, this was a dovish rate hike with
   Governor Bailey striking a cautious tone about the future. The vote was split
   7-2, with two members voting for no rate hike at all, and this appears to
   indicate that the committee are moving closer to pausing their rate hike
   cycle. Their language also appeared to suggest that if they do hike at their
   next meeting then it will be a smaller (0.25%) one. They lowered their
   inflation forecasts and now expect inflation to move to under 4% by the end
   of this year (versus previous expectations for 5%). Although they believe the
   UK recession will be shallower than previously anticipated, they’re still
   referring to the R-word in their correspondence which contrasts with other
   major central banks including the Fed and ECB. I guess it’s no wonder as the
   UK is currently facing some major headwinds including the ongoing strikes,
   Brexit Northern Ireland Protocol issues, sluggish growth, and negative
   forecasts from the IMF to name a few. Across the pond, the USD was sold
   overnight after the Federal Reserve voted to raise interest rate by 0.25% and
   Fed Chairman acknowledged the disinflation in goods is picking up. It appears
   to the markets that the aggressive rates hikes made by the Fed are now
   seeping into the economy and starting to reflect in prices. In contrast, the
   ECB are continuing to play catch up on inflation/rate hikes and they’ve just
   voted to raise rates by another 0.5% (with suggestions they’ll repeat this
   hike at their next meeting). This has created increased flows out of the USD
   and into the Euro (but less so into GBP for the above reasons). As a result,
   the GBP/EUR hit a 4-month low this afternoon having lost around 2.5 cents
   from last week. The GBP/USD lost a cent from this morning but still trades
   around relatively buoyant levels. The EUR/USD touched market levels over 1.10
   which represents a 9-month high.
   
   READ MORE
 * Jan 6, 2023
   
   
   HAPPY NEW YEAR
   
   Happy New Year! We hope you had a lovely break and wish you a happy and
   healthy 2023. High volatility in the FX markets continued into the end of
   2022 and, even after just a few days of the new year, it appears this theme
   may continue into 2023. Last year, as the world began to emerge from the
   Covid pandemic and Russia started it’s invasion on Ukraine, surging inflation
   and the consequential unprecedented interest rates that followed took centre
   stage in global financial markets. Focus is likely to remain on inflation and
   what impact the aggressive interest rate hikes are having on this and
   countries economic growth. Only time will tell on how well the major central
   banks have dealt with this balancing act and we should start to get a good
   picture over the coming year. The Russian invasion on Ukraine has had a
   significant impact on riskier currency assets, such as the Pound. It
   triggered the major move lower in the GBP/USD which traded comfortably over
   1.30; a move lower which ultimately ended in a record low in GBP/USD
   following the disastrous mini-budget from Liz Truss’ short lived reign as PM.
   Unfortunately, as things stand, it appears that this war will continue for
   the foreseeable future, however developments will be closely watched for any
   signs of peace or escalation and risk assets will act accordingly. China’s
   zero-covid policy continued to damage global supply chains and heavily impact
   on inflation throughout 2022 with whole regions being shut down for extended
   periods of time. They now appear to be moving away from this policy and
   opening back up to the world. This should help improve the supply of goods
   around the world and make a heavy contribution towards bringing inflation
   down. Sterling made a good recovery after Liz Truss exited as prime minister
   with Sunak providing a more stable political environment helping to boost
   investor confidence in the UK. However, the UK economy remains very fragile
   with many headwinds (including the cost of living crisis, Northern Ireland
   Brexit negotiations etc) and the Pound has given back a lot of the ground it
   made during the first half of December. Traders will be closely watching the
   key UK economic data releases to assess how well the UK economy is doing and
   therefore how long they should be on the Pound. Across the pond, the US
   Dollar continues to trade strongly. Last year, we saw the USD largely benefit
   from risk flows from the Ukraine war and global economic crisis, along with a
   very hawkish Federal Reserve hiking interest rates to over 4%. On the
   surface, it seems the Fed’s aggressive response to hiking rates is beginning
   to pay dividends, as US inflation has seen a retreat in the last two postings
   and is expected to continue to cool down. Some questions are how much further
   do the Fed need to go with their rate hike cycle and are they going too far
   and risking a major pullback in growth. Certainly the employment market in
   the US seems robust and continues to surprise, with no lack of slowdown
   taking place in the number of new jobs being created. Closer to home, the
   Euro saw a year of large depreciation in 2022 and eventually went under
   parity against the USD. Like the Pound, the Euro was heavily affected via the
   Russia-Ukraine war, where we see still see the pipeline embargo bubble away
   in the background. Furthermore, unlike the US, the ECB reacted quite late to
   rising inflation in a failed hold-off approach. As a result, their delayed
   reaction to rising inflation saw prices skyrocket to double figures. However,
   once the penny dropped with the ECB, they also became aggressive with their
   rate hikes which helped bring the EUR/USD back over parity and up to around
   1.07 at the turn of the year. There’s a good chance that the ECB will have to
   continue with some heavy rate hikes this year, which might provide some short
   term support, although the ECB have a fine balancing act to also not rumble
   struggling growth and delicate peripheral bond markets. As a result, the
   GBP/USD now trades around a 6-week low and has lost around 2-cents this week
   (and around 5.5 cents from December’s high). The GBP/EUR touched around the
   lowest levels in 3-months and continues to remain subdued around these
   levels. The EUR/USD trades around a 4-week low after losing around 2-cents
   from the start of this new year. On the immediate horizon we have US non-farm
   payroll figures out this afternoon and we will keep you updated on any major
   news.
   
   READ MORE

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