Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

In this note, we discuss the reasons behind the stability in EM currencies and whether it can continue.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market. The analysis, therefore, is not a forecasting tool but to be used for identifying dislocations, which we loosely define as price moves that cannot be justified by fundamentals.

In this note, we discuss the reasons behind the stability in EM currencies and whether it can continue.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market. The analysis, therefore, is not a forecasting tool but to be used for identifying dislocations, which we loosely define as price moves that cannot be justified by fundamentals.

FX Dashboard: EM FX Volatility Remains Low

In this note, we discuss the reasons behind the recent lag of the Colombian peso and argue that it may continue to underperform in the near term.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market. The analysis, therefore, is not a forecasting tool but to be used for identifying dislocations, which we loosely define as price moves that cannot be justified by fundamentals.

In this note, we discuss the reasons behind the recent lag of the Colombian peso and argue that it may continue to underperform in the near term.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market. The analysis, therefore, is not a forecasting tool but to be used for identifying dislocations, which we loosely define as price moves that cannot be justified by fundamentals.

FX Dashboard: Colombian Peso to Continue Underperforming

Chief Economist, Heteronomics

Phil Rush

Chief Economist

Heteronomics

Heteronomics represents a different kind of economics. We believe analysis should delve into the details of what is really going on, rather than using overly simplistic assumptions to quick-sell stories. Independence from myopic institutional pressures allows us to focus on the realities underlying your asset allocation decisions, without the conflicts of the old market structures. Heteronomics targets the themes driving UK asset prices, offering the benefits of depth, independence and ultimately price.

UK-centric macro research

Macroeconomics

<ul>
<li>The beginning of the third national lockdown’s end on 8 March will see the return of conditions equally as tight as during the second one from November. UK GDP should recover by a few per cent in March but we still see it down by 4.5% q-o-q in Q1.</li>
<li>Further easing is extremely gradual with remaining restrictions only planned to end on 21 June if everything goes to plan. The UK is failing to capture a relative economic dividend from its relatively successful vaccination programme, despite bullish pricing.</li>
</ul>


The beginning of the third national lockdown’s end on 8 March will see the return of conditions equally as tight as during the second one from November. UK GDP should recover by a few per cent in March but we still see it down by 4.5% q-o-q in Q1.
Further easing is extremely gradual with remaining restrictions only planned to end on 21 June if everything goes to plan. The UK is failing to capture a relative economic dividend from its relatively successful vaccination programme, despite bullish pricing.


<ul>
<li>UK retail sales fell by more than three times what the consensus expected in Jan-21, with the -8.8% m-o-m outcome also triple the pain of the Nov-20 lockdown. Food sales started too high to rally further, while the non-food crash was about 50% of lockdown 1.</li>
<li>This disappointment is likely to continue the downwards trend in GDP forecasts. That doesn’t matter to Sterling’s vaccination-fuelled up-trend, but while markets hope it will allow the UK to unlock quicker, EA and SE activity has just gone ahead and increased.</li>
</ul>


UK retail sales fell by more than three times what the consensus expected in Jan-21, with the -8.8% m-o-m outcome also triple the pain of the Nov-20 lockdown. Food sales started too high to rally further, while the non-food crash was about 50% of lockdown 1.
This disappointment is likely to continue the downwards trend in GDP forecasts. That doesn’t matter to Sterling’s vaccination-fuelled up-trend, but while markets hope it will allow the UK to unlock quicker, EA and SE activity has just gone ahead and increased.


<ul>
<li>Inflation exceeded consensus expectations again in Jan-21 while matching both our CPI and RPI forecasts of 0.7% and 1.4% respectively. Weighting changes were worth about 0.1pp to the CPI with the other 0.1pp caused by upside in furniture and restaurants.</li>
<li>The distortion in the UK was smaller than elsewhere in Europe because the weight on garments was raised rather than slammed down. This is likely to more than unwind next January if it's not corrected next month alongside the release of RPI weights.</li>
<li>A continued grind higher looks likely to occur in both Feb and Mar before inflation spikes back into the right ballpark of the target in April. We still expect a potential breach of the target in 2021, but for it to be of insignificant size and longevity.</li>
</ul>


Inflation exceeded consensus expectations again in Jan-21 while matching both our CPI and RPI forecasts of 0.7% and 1.4% respectively. Weighting changes were worth about 0.1pp to the CPI with the other 0.1pp caused by upside in furniture and restaurants.
The distortion in the UK was smaller than elsewhere in Europe because the weight on garments was raised rather than slammed down. This is likely to more than unwind next January if it's not corrected next month alongside the release of RPI weights.
A continued grind higher looks likely to occur in both Feb and Mar before inflation spikes back into the right ballpark of the target in April. We still expect a potential breach of the target in 2021, but for it to be of insignificant size and longevity.


United Kingdom

The British Pound Sterling is the official currency of The United Kingdom. 

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

GBP (GBPUSD CURNCY)

FX Dashboard: EM FX Volatility Remains Low

Attached is our daily FX Dashboard that helps identify dislocations among EM currencies. In this note, we discuss the reasons behind the stability...

Gautam Jain, PhD, CFA

FX Dashboard: Colombian Peso to Continue Underperforming

Attached is our daily FX Dashboard that helps identify dislocations among EM currencies. In this note, we discuss Colombian peso's recent lag and...

Gautam Jain, PhD, CFA

UK: Lockdown Exit-Road Full of GDP Peril

The beginning of the third national lockdown’s end on 8 March will only return conditions to those from the second one (November's). The UK is...

Phil Rush

UK: Retail Pain Triples in Lockdown 3

UK retail sales fell by over three times what the consensus expected in Jan-21, with the -8.8% m-o-m outcome also triple the pain of the Nov-20...

Phil Rush

UK: Inflation Up-Scaled in Jan-21

UK inflation exceeded consensus expectations in Jan-21 while precisely matching both our CPI and RPI forecasts. Re-weighting distortions were...

Phil Rush

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)