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We've been really impressed by the support and responsiveness of Meridian's team. They've been a key partner in helping us protect our budget levels through a turbulent few years in the markets. We wouldn’t hesitate in recommending them.
Hilary Hansen, Director, Schotten & Hansen UK
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.
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Latest News
Sterling buoyed by "good progress" in Brexit talks
Sterling has moved higher today following reports of positive developments in Brexit trade talks.
Earlier, Michel Barnier stated that “good progress” had been made in the talks and that only the “last stumbling blocks” remained in the way of an agreement. It seems substantial progress has been made on the key level-playing field issue after Boris Johnson allowed an alignment mechanism with EU rules. The politically sensitive fisheries issue now appears to be the main focus of these last ditch talks and an agreement looks more likely to be reached over the next few days (potentially by Sunday). This has supported the Pound today and also increased market risk appetite.
In other news, the USD has continued to weaken after the Federal Reserve said it would continue to keep channelling cash into financial markets until the US recovery looks fully in hand. Furthermore, the chances of agreement on a $900 billion US stimulus package and a post-Brexit trade deal have both risen, which has further boosted market risk appetite and therefore reduced the appeal of safe-haven currencies, such as the US dollar.
As a result, the GBP/USD rate has hit a fresh 2.5 year high today having gained nearly another 1% today. The GBP/EUR has also clawed back some ground and touched the top of the range we’ve seen in December. The EUR/USD has continued its push higher and now trades over 1.22. Attention will continue to focus on Brexit developments and whether there are any last minute political dramas to try and appease their domestic audiences.
Sterling made some big losses overnight in response to a sell-off in global stock markets.
Rising government bond yields globally (particularly US treasuries) have contributed heavily to this move, signalling investors are fearful inflation could spike if the global economy overheats as economies strengthen and recover following the pandemic. This could force central banks to withdraw stimulus sooner than expected by exiting their generous quantitative easing programmes and raising interest rates earlier than they’re indicating.
This has created a heavy risk-off sentiment which the pound is particularly vulnerable to. Furthermore, the large gains Sterling had made this week had pushed it into overbought territory and therefore vulnerable to a correction and profit-taking.
As a result, the pound has given up the gains it’s made this week and we’ve seen the biggest 24-hr decline in the pound in 2021. The GBP/USD is down around 2.5 cents from yesterday’s high and back under 1.40 (at an 8-day low). The GBP/EUR is down around 1.3% from yesterday’s high and nearly 2-cents off this week’s high (a 9-day low).
Markets will be keeping a close eye on the central banks to see if they will try and calm the bond markets down. The tantrum in the bond market is damaging central bank credibility and, as much as they will not want to cause alarm by intervening, they might need to if the rout continues.
Pound strengthens as Johnson announces roadmap out of lockdown
Sterling has made further gains this morning following Boris Johnson’s announcement to reopen the UK over coming months.
The roadmap set out last night by the Prime Minister has been well-received by markets, with the cautious approach giving economists optimism that the UK will avoid a fourth lockdown and be on course for a strong economic rebound.
This morning the pound has also received a boost from UK employment figures, which showed wage growth accelerating to 4.7% annually and unemployment dropping by 20,000 last month. However, it’s yet to be seen what will happen in the jobs market when the government ends the current furlough scheme.
The broad weakening of the USD has also benefitted Sterling, as US bonds receive a fresh bid, lowering their yields and pushing the dollar down. Investors have been cautious to favour the dollar ahead of this afternoon’s Federal Reserve Chair Jerome Powell’s speech to Congress, with the expectation that he will look to keep above-target inflation in the medium term and keep borrowing costs low to support growth.
As a result, the Pound has pushed through some key technical levels across the major currencies and appears to continue to have momentum. The GBP/USD has hit the highest levels since April 2018 and has gained around 5-cents in February. The GBP/EUR has continued to rise and now trades at the highest levels since March 2020 and moved up nearly 6-cents since the start of this year.
The pound has just moved higher following the latest Bank of England interest rate setting meeting.
As expected, the central bank kept interest rates on hold at 0.1% and left their quantitative easing programme unchanged. In the minutes that accompanied the decision, however, the BoE sounded relatively optimistic about the economic outlook, projecting a quick recovery to pre-covid levels by the end of the year and for inflation to pick up towards their 2% target levels over the coming months. They also hinted that they are not in any major rush to look at negative rates.
As a result, the GBP/EUR has jumped nearly 1-cent today and hit a fresh high from May 2020. GBP/USD has made back some ground and continue to trade relatively high.
The Euro has weakened this morning, triggered by European Central Bank comments expressing concerns about the strength of the common currency.
ECB policymaker Klaas Knot commented that the ECB were closely monitoring the exchange rates and have tools to counter further appreciation of the Euro if necessary, including potentially cutting interest rates. Economic growth is slow within the bloc and an overly strong Euro could potentially exacerbate this issue, further slowing the recovery.
This comes off the back of a sluggish start to the vaccine rollout in Europe, seeing only 2 in every 100 people vaccinated, compared to the UK's 10 in 100. The UK remain one of the fastest nations globally to roll out the vaccine, leading to Sterling's boost.
Analysts are viewing the speed of the rollout as a key driver for economic growth and currency performances in 2021. Optimists are hoping the UK's impressive vaccine rollout will make negative interest rates less likely, supporting the UK's economic rebound. However, the full impact of the third UK lockdown is yet to be understood and this could weigh on Sterling over the longer term. A sharp contraction in growth from this current lockdown might prompt the Bank of England to cut interest rates later in 2021.
As a result, the GBP/EUR has hit a fresh 8 month high after gaining 1-cent since yesterday’s low. The GBP/USD has gained around 1% since yesterday’s low and touched the highest levels since May 2018. The EUR/USD is down 0.5 cents and towards the bottom of its weekly range.
Eyes will now turn onto tonight's federal reserve interest meeting, alongside updated Covid-19 case numbers globally.
Pound strengthens as investor sentiment improves and inflation moves higher
Sterling has moved higher this morning as positive risk sentiment and higher UK inflation data makes the Pound more attractive to investors.
UK inflation figures came in at 1.4% year on year, slightly above the expected 1.3%. These levels are rather subdued but indicate that prices are rising, which may reduce the urgency of the Bank of England to further ease monetary policy. The Pound caught a bid following the release of these figures which tipped the GBP/EUR above a key technical resistance level which in turn has helped push the GBP/USD to a fresh high.
Optimism over the UK’s rollout of the Covid-19 vaccine and lowering case numbers have also given investors an underlying reason to buy the Pound, with today's move creating the impression that larger investors are correcting their positioning on Sterling. The GBP/USD is currently trading around an important area of resistance and, from a technical perspective, a clean break higher could potentially open it up to stronger levels, although the market might need more evidence before having the legs to do so.
As a result, the GBP/EUR has hit the highest levels since May last year and the GBP/USD has reached the strongest rate seen since May 2018.
Pound rises after hawkish BoE comments and vaccine rollout
The Pound has moved higher following the Bank of England's apparent reluctance to set negative interest rates and a positive start to the UK vaccine rollout.
The BoE’s Governor, Andrew Bailey, commented yesterday that it was unlikely the interest rate would be cut to 0% or below in coming weeks, as he anticipated an economic recovery was now on the cards. Lowering interest rates typically make a currency less attractive as it reduces investment yields, therefore these comments have helped to support Sterling.
The Pound was also boosted as the UK’s vaccine campaign accelerates well ahead of Europe and the US. Nearly 2.1 million vaccines have been administered so far, currently more than the continental European countries combined. A target has been set to vaccinate 15 million of the most vulnerable by mid-February to ease pressure on health services.
These figures put the UK in very good stead and the development could prove beneficial for Sterling. It will ultimately determine when the UK economy is able to recover, influencing the BoE’s decisions on interest rates and quantitative easing. Investors will also pay close attention to the daily tally to gauge whether the target will be reached, with countries being seen to exit the health crisis first expected to be rewarded by foreign exchange investors in the medium to long term.
The US Dollar has lost footing once again amidst a slower start to vaccine rollout, continued political tension and a ten-year treasury auction in the US which triggered falling bond yields. The House of Representatives may impeach President Donald Trump for incitement of insurrection after Vice-President Mike Pence rejected calls to use the 25th Amendment to remove Trump from office. Concerns about violence surrounding Joe Biden’s inauguration are heightened, but markets are placing their focus on the incoming administration's economic priorities versus the outgoing one.
As a result, the GBP/USD has moved up 1.2% from yesterday’s low and traded close to the highest levels we’ve seen since May 2018 before meeting resistance. The GBP/EUR has edged higher through yesterday and this morning, gaining 1-cent and earning a 6-week high.
Happy new year!
2020 was a volatile year in the markets and with Brexit and Trump now (almost) out of the door, will 2021 be calmer?
Brexit deal done but Covid crisis undermines Pound:
The Pound ended the year on relatively firm footing after the successful passage of a Brexit deal through Parliament. However, the rise in Sterling following the announcement of a deal was not as dramatic as some market participants had expected. This is likely down to a ‘buy the rumour, sell the fact’ move, as a deal was generally expected.
In addition, the Coronavirus pandemic looks set to continue being a key driver of Sterling over the next few months. New record levels of Covid-19 cases in the UK and the resulting restrictions have been putting a dampener on Sterling, which further explains the lacklustre response following the Brexit deal.
The UK economy has been plagued by years of uncertainty over Brexit and there's now hope that major inward investment plans for the UK will come to life after previously being put on hold. Sterling derives a lot of its value from inward investment flows, so this could see a boost of the Pound if the floodgates open. It now looks likely that traders will move on from the spontaneous Brexit reactions caused from comments by UK/EU officials. Instead, they will try and ascertain the longer-term impacts of Brexit by tracking the economic performance of the UK after leaving the EU and once we emerge from the Covid crisis.
Pound traders will be closely watching the Bank of England’s response to the rising Covid-19 infections and the impact this is having on the UK's economic outlook. Although they’ve generally shied away from talk of negative interest rates, the market is now expecting the BoE to set negative rates by May 2021. Sterling is likely to move depending on comments from BoE officials and how long the new tighter Covid restrictions last in the UK. Furthermore, how quickly the UK Government can roll out the new vaccines which are being heavily relied upon for a return to normality. A faster UK roll-out versus our international peers would give Sterling an advantage.
Trump on way out but Dollar remains on backfoot:
The US Dollar has started the year how it ended 2020: remaining firmly on the backfoot. Expectations the Federal Reserve will keep interest rates lower for longer, the increasing likelihood of further US Covid relief funding and broader improving global market risk sentiment has turned traders away from the ‘safe haven’ Dollar. However, we are far from out of the woods with this pandemic and therefore risk sentiment can quickly change.
With Trump exiting the White House this month and Biden taking charge, the markets are closely watching the results of tomorrow’s runoff Senate elections in Georgia to see if the Democrats can gain control of the Senate. Without victory, Biden would find it a challenge to pass major reforms. However, a victory here would likely lead to increased Dollar weakness as stimulus would be even more generous.
As a result, the GBP/USD hit fresh highs from May 2018 this morning. The GBP/EUR is down around 1-cent from New Year’s Eve but trades toward the higher end of where it’s been over the past 4-weeks. The EUR/USD continues to trade higher having hit fresh highs from April 2018, with the market touching 1.23.
Hopefully by the end of 2021, the world will return to normal after the pandemic and the impact the virus has on currencies will disappear. For now though, and particularly the next few months, the virus is likely to take centre-stage, which means volatility levels should remain high. As we move through the year and the restrictions (hopefully) subside, the economic data coming out of the different nations will come further to the fore as analysts begin to more accurately calculate the true impact.
The Pound has tumbled this morning after the UK government announced new restrictions to reduce the spread of a new Coronavirus strain.
Following a spate of new cases in London and the South East of England, Boris Johnson announced new Tier 4 restrictions for millions and reversed plans to loosen restrictions over the Christmas period.
Although there is no evidence this mutation is more deadly, or resistant to the new vaccines, governments across Europe are not taking any chances. They have severed transport ties with the UK in a bid to prevent the spread of the new virus strain, which is believed to be 70% more transmissible. Boris Johnson is calling together his Cobra Cabinet for an emergency meeting following rising concerns that British supply chains will be hit hard.
With only ten days to go until the end of the Brexit transition period, negotiators have failed to reach an agreement over the weekend, reaching stalemate over EU demands on fisheries. The UK are insisting the EU needs to budge on their stance, but we have seen no further progress. Having missed another ‘deadline’ set by the European Parliament (Sunday), it appears that talks will go down to wire and this is creating some concern in the market, adding to Sterling woes today. However, a deal still seems the most likely option, with fisheries always expected to be sticking point given political sensitivities.
As a result, the GBP/USD has fallen around 2% from Friday’s high and trades at a one week low. The GBP/EUR has lost around 2-cents from Friday and now trades at a 10-day low.
Sterling buoyed by "good progress" in Brexit talks
Sterling has moved higher today following reports of positive developments in Brexit trade talks.
Earlier, Michel Barnier stated that “good progress” had been made in the talks and that only the “last stumbling blocks” remained in the way of an agreement. It seems substantial progress has been made on the key level-playing field issue after Boris Johnson allowed an alignment mechanism with EU rules. The politically sensitive fisheries issue now appears to be the main focus of these last ditch talks and an agreement looks more likely to be reached over the next few days (potentially by Sunday). This has supported the Pound today and also increased market risk appetite.
In other news, the USD has continued to weaken after the Federal Reserve said it would continue to keep channelling cash into financial markets until the US recovery looks fully in hand. Furthermore, the chances of agreement on a $900 billion US stimulus package and a post-Brexit trade deal have both risen, which has further boosted market risk appetite and therefore reduced the appeal of safe-haven currencies, such as the US dollar.
As a result, the GBP/USD rate has hit a fresh 2.5 year high today having gained nearly another 1% today. The GBP/EUR has also clawed back some ground and touched the top of the range we’ve seen in December. The EUR/USD has continued its push higher and now trades over 1.22. Attention will continue to focus on Brexit developments and whether there are any last minute political dramas to try and appease their domestic audiences.
Sterling made some big losses overnight in response to a sell-off in global stock markets.
Rising government bond yields globally (particularly US treasuries) have contributed heavily to this move, signalling investors are fearful inflation could spike if the global economy overheats as economies strengthen and recover following the pandemic. This could force central banks to withdraw stimulus sooner than expected by exiting their generous quantitative easing programmes and raising interest rates earlier than they’re indicating.
This has created a heavy risk-off sentiment which the pound is particularly vulnerable to. Furthermore, the large gains Sterling had made this week had pushed it into overbought territory and therefore vulnerable to a correction and profit-taking.
As a result, the pound has given up the gains it’s made this week and we’ve seen the biggest 24-hr decline in the pound in 2021. The GBP/USD is down around 2.5 cents from yesterday’s high and back under 1.40 (at an 8-day low). The GBP/EUR is down around 1.3% from yesterday’s high and nearly 2-cents off this week’s high (a 9-day low).
Markets will be keeping a close eye on the central banks to see if they will try and calm the bond markets down. The tantrum in the bond market is damaging central bank credibility and, as much as they will not want to cause alarm by intervening, they might need to if the rout continues.
