Good morning,

Yesterday’s movement proved choppy, with a GBP drop in market open, a midday tease at some pound recovery, and the day finishing with a sell-off to drop the GBPUSD back below 1.21 in overnight trading.

Trump tweeted on dollar’s strength and its ricochet effect on global markets, calling for a rate cut of 100 basis points and consideration of quantitative easing.

Although his stance is very clear on the desire to devalue the dollar, markets swayed the other way, with risk diminishing from the trade dispute with China, allowing money to crawl out of the haven assets and back into the stock market and higher-yielding currencies, driving the dollar up.

The euro pushed back on the pound also, with Germany preparing for fiscal stimulus measures to support their economy should it be needed. However, the GBPEUR is unlikely to confidently pick a direction for momentum at this point, with political uncertainty rife on both sides.

Italy will see the confidence vote this afternoon, whilst the UK will go through the movements instigated by Corbyn for a vote of no confidence this Autumn.

Meanwhile, in the background, Gove seems to be desperately pouring water on the fire caused by the leak of Operation Yellowhammer, outlined in my update yesterday, stating that it is “outdated” and that it’s an extreme “worst-case scenario”.

Although the pound is certainly under pressure with a clear bearish weight, it is all relative.  As of Monday 12^th this month, GBP is up 1% on the dollar and 2% on the euro, highlighting that even in the short term there is an opportunity. It’s therefore crucial to feedback to your account manager your requirements and timeframes, in order to get the support to target and react accordingly to the market trends over the uncertain time period.

Have a great day ahead.

Author: Ross Hammond, Senior Corporate Account Manager

The post Trade disputes settle, dollar finds its footing appeared first on WorldFirst UK Blog.

Good morning,

The week begins with the final euro inflation data out this morning at 10:00 BST, with no surprises anticipated from the flash estimates.

The sentiment on the pound this week has, as expected, opened nervously with an abrupt 0.2% drop on GBPUSD and 0.3% on GBPEUR. As we move closer towards the deadline of 31st October, the weight of passing comments and opinions start to bear heavier. Mark Carney’s comment that a no-deal Brexit would cause an “instantaneous shock” and would likely threaten the validity and ability of businesses to continue in operation is a real concern that international businesses will be feeling and, no doubt, aggressively planning for.

To build on the growing fears, a timely leak of an official document on Sunday, “Operation Yellowhammer”, which details the predicted outcomes of a no-deal Brexit has revealed a harrowing reality of the extent of disruption that the UK may see around key fundamental areas. The report details the negative effects on transport delays, medicine supplies, fresh food shortages and the implication that this would have – pressuring price rises. The overall summary is that the UK is not in a prepared state for a no-deal.

With Britain being backed against the ropes by political developments, the US dollar will share this narrative, with the focus this week on the US/China trade negotiations. Positive tweet action from Trump around this may ease the markets as the yield curve inversion is still holding firm in traders’ minds. Any positive development which can take the foot off the accelerator of the global recession fears will be welcomed across the board.

The scope of the downside that the pound may see is likely to be really be tested this week, with predictions and extreme scenario outcomes likely to pepper themselves across the media.

We would advise that if you have currency transactions over the next few months to speak to your account manager this week to discuss potential ranges that your currency exposure may see and get a plan for exchange in place.

Have a great week ahead. 

Author: Ross Hammond, Senior Corporate Account Manager

The post Pound vulnerability ahead appeared first on WorldFirst UK Blog.

Good morning,

Today is a very thin day with data, as the week finishes off with a busy day yesterday.

We saw the pound piggybacking off some positive retail sales, crossing the 1.09 mark against the euro, and the 1.21 on the dollar. Although some encouraging strength for the pound was well received, the metaphorical legs may very well tire as the focus next week will likely shift back to the politics of Brexit.

EURUSD has opened below 1.11 this morning after the initial poor data front from Germany picked up momentum with European Central Banks’ Rehn hinting that September’s stimulus measures may overshoot expectations yesterday.

With little on today, the markets may take a well-deserved breather as we prepare for the next week.

Have a great weekend.

Author: Ross Hammond, Senior Corporate Account Manager

The post Strong retail sales drive pound appeared first on WorldFirst UK Blog.

Good morning,

Yesterday’s key movement was driven around the macro fears bleeding around the globe.

The US yield curve inverted for the first time since the financial crisis in 2008, showing a strong indicator that market fears of a global recession are growing. With Asian debt markets geared to follow suit, and disappointing data in Germany and China yesterday, the painting of this picture is becoming much more vivid.

The implication this is likely to have on currencies will follow the markets fear of riskier investments, with money flooding into haven assets.  US equities lost 3% whilst Gold accumulated the fear demand, and the Japanese Yen spiked as one of the stronger haven currencies.

The EURUSD got knocked below the key 1.1160 level with Germany pulling confidence down.

If you are trading in emerging markets then this will need to be closely monitored as the demand, and therefore strength will be highly affected by global market strength.

The pound will face retail sales numbers this morning, with a negative read anticipated, whilst the US expect a better result this afternoon. This topped off with Corbyn’s plan to call a no-confidence vote to block a no-deal will put the GBP under some volatile pressure to end the week, as markets debate the possible leadership change vs a no-deal crash out.

Considering your forward exposure of currency is essential at this point, as downside protection is critical. Call in to have a discussion with your account manager around risk mitigation and scenario planning.

Have a good day.

Author: Ross Hammond, Senior Corporate Account Manager

The post Global recession looming? appeared first on WorldFirst UK Blog.

Good morning,

As I mentioned in yesterday’s daily update, Tuesday saw the release of the first of 3 key data releases from the United Kingdom at 9.30am, the result, however, was not clear cut.

Unemployment ticked up slightly, whilst average earnings also moved up – the result on the pound, was akin to a trampoline: what goes up, must come down – which it did, directly back to its average daily price of 1.0781.

Today will see the 9.30am release of production and inflation numbers – a critical barometer to an Brexit-sceptic Bank of England; who have so far elected to hold rates as they are on the approach to October the 31^st, any indication that builds into suspicions a rate cut could be on the horizon would likely add further fuel to the inferno engulfing the pound.

On the continent, the Italian senate reconvened to vote on the partisan calls for an end to the ruling coalition by way of a no-confidence vote. When the two parties could not agree, the senate was recalled from its recess to vote on it – which it, in turn, voted to reject the call, passing the decision to Prime Minister Giuseppe Conte, who will act on the 20^th of August.

The unfolding situation has had a notable impact on the Euro’s health in the short run, as snap election fears are built in to the debt-riddled nation, which for most of this year, had been flirting with a referendum on the single currency’s use.

In Germany, data released at 7 am this morning showed a flat 0.0% growth to its economy, whilst avoiding technical recession of two-quarters of negative results, it does mean that Europe’s powerhouse has now not grown this year at all. The continuing knock-on effect from being caught between China and the USA, despite President Trump’s announcement that some tariffs were being delayed last night, means that Germany cannot find markets to export to – which in turn fuel its growth.

With regards to the ongoing trade war between China and the USA; overnight, China released its industrial production and retail sales figures, with both positing sizeable 1% misses on expectations. More on the escalating trade conflict can be found in my article on published last week: ‘More fronts open in the global trade war’ highlighting how even though the world’s superpowers are seeking to curb each other’s trading might, many other economies are being pulled into the firing line.

Have a great day.

Author: Joshua Haden-Jones, Private Dealing Account Manager.

The post One down, two to go appeared first on WorldFirst UK Blog.

What’s new with PSD2?

At WorldFirst, we are committed to evolving, both to improve our product offerings for our customers, and to also keep up to date with vital regulatory or solution updates. The next being that we are launching a PSD2 API from the 14th August for Third-Party Providers (TTPs). It will allow WorldFirst World Account customers to link and manage their currency account, edit beneficiaries (from September onwards) and make World Account payments as required.

We want our Third-Party Providers (TPPs) to have enough time to test our API. We are inviting authorised Account Information Providers* (AISPs) or Payment Initiation Service Providers (PISPs) to engage with us and test this API to ensure a smooth operational integration from the launch date of the 14^th September 2019.

PSD2 defines two types of third-party providers (TPPs), regulated by National Competent Authorities*. These are outlined below:

1. Account Information Service Providers (AISPs)

These are service providers that aggregate and display the customer’s online account information. Including one or more accounts held at one or more account servicing payment service providers (AISPs).

2. Payment Initiation Service Providers (PISPs)

These are service providers that initiate payment transactions on behalf of the customer.

What this means for AISPs and PISPs

Regulated TPPs can use the sandbox environment that WorldFirst is making available from the 14th of August and integrate with the API, fully testing the functionality provided. To be eligible to test in the sandbox environment TPP’s must be authorised by the FCA as either an AISP or a PISP and meet the necessary security requirements.

Whilst we do not expect there to be any problems, it is always good to be prepared for the unexpected so we welcome all feedback as part of this testing phase and will work directly with you to address any issues.

This means that by the 14th September deadline for full implementation, TTP’s would have tested the API using our sandbox credentials and be prepared to make the integration production-ready. The next step for TTPs involves you requesting production system credentials. These can be accessed by visiting our dedicated PSD2 API web page and following the instructions.

Once you have made the integration production-ready, you will be able to provide account information requests and payment initiation from a WorldFirst World Account to your customers without leaving your interface.

PSD2’s importance

The focus of PSD2 is to closer align payment regulation with where businesses and technology are currently and have clear security requirements for electronic payments being started and processed.

Increasing customer security is key to PSD2, which includes Strong Customer Authentication (SCA). This is an authentication process that validates the identity of the user of a payment service or a payment transaction. For more information, see PSD2.

TPPs can enrich their communication security with PSD2 as it requires TPPs to use electronic Identification, Authentication and Trust Services (eIDAS) certificates for electronic signatures and electronic seals. As a result, Qualified Trust Service Providers (QTSPs) issue the eIDAS certificates, further ensuring security.

Finally, it has the mandate to protect consumers data.

Find out more from our experts

It’s simple to gain the correct sandbox credentials to perform your testing. Get your sandbox account and start testing the possibilities of WF’s PSD2 API. For technical questions or help with any of your issues please contact us at the following email address: api.integration.support@worldfirst.com and we’d be happy to support you further.

*https://www.eupati.eu/glossary/national-competent-authority/   – https://eba.europa.eu/supervisory-convergence/supervisory-disclosure/competent-authorities – https://eba.europa.eu/single-rule-book-qa/-/qna/view/publicId/2019_4609

The post PSD2 Third-Party Provider Update appeared first on WorldFirst UK Blog.

Good morning,

The pound recovered some of it catastrophic Asian session losses yesterday against the Euro, not through any handiwork of its own, but by increased Italian election fears – as the coalition began to crumble, with snap elections looking more likely.

The current Italian administration has never been Euro-positive, with many of its representatives being from the Eurosceptic 5-star movement, who have, in the past, called from an abandonment of the single currency and a return to the lira; policies which hardly breathe life into the euro.

The main partners in the coalition, the 5-star party and League party met at an emergency meeting yesterday to discuss a no-confidence vote in the arrangement, with some speculation that the League party’s climbing popularity is driver being the split. The two parties quarrelled and found no amicable agreement, which has now led to the entire senate being called back from recess to debate the no-confidence proposal.

Back in the UK, the first of three data releases posts is due at 9.30am, the other two being tomorrow and Thursday, focusing on Britain’s unemployment numbers. Historically, despite the disruption caused by Brexit, unemployment numbers under the Conservatives have steadily decreased – a rare glimmer of hope in amongst other data releases that have pointed towards technical recession. Coupled with this, are average earning numbers also – which in turn has a knock-on effect on inflation, monitored by the Bank of England.

A continuation of higher pay and more people in work could lend more respite to the beleaguered pound in the short-run, with the downward emphasis still weighing heavily upon it as we get closer to the 31^st of October.

It is definitely worth considering taking advantage of any bounces in the pound at the moment, as the forecasts, trend and market sentiment still point towards sustained sterling selling – a deal or official refusal of no-deal could alleviate the pressure; however, under the current administration, this looks to be further away than it ever has.

Have a great day,

Author: Joshua Haden-Jones, Private Dealing Account Manager

The post Italian election fears offer a brief sterling rebound appeared first on WorldFirst UK Blog.

Good morning,

In what seems to be a never-ending sense of déjà vu, GBP once again posted new lows against both the USD and EUR.

Upon the opening of the Asian trading session, on Sunday at 10 pm GMT, the pound plummeted to lows of 1.0638 on the EUR, levels not seen since 05/10/2009 – yes you are reading that correctly, 10-year lows. Against the dollar, the dip extended to lows not tested since 16/02/2017, from two years to two and a half year lows. As far as what caused the heavy selling on market open, essentially nothing new: a shrinking economy, no-deal pressure and general election fears all point towards sustained pound suppression, which currently, is in its 14^th week of losses.

With regards to what to do next with GBP, many of my sterling holding clients have asked “How low will it go?” to which I usually answer with the question of “Why are you letting it fall lower against you?”

Whilst it is tempting to try to play the market and hope for a rate rebound back to the seeming glorious days of 1.10 – the fact of the matter is, however, hoping for a recovery in sterling has never been a worse strategy.

On top of the unholy trinity mentioned above, a cluster of data releases at 9.30am GMT Tuesday, Wednesday and Thursday this week could all have the potential to push the pound towards the 1.0560 range, which would be 10 and a half year lows; beyond that is the lowest the pound has ever been against the single currency, 1.0208. After that, the question becomes, technically speaking, impossible to answer – as the pound would enter uncharted territory, with no further historical data available to consult.

Off a cliff in every sense of the term.

If you are currently considering a GBP transfer, there has never been a more critical time to get in touch with your account manager to discuss the affordability of your exchange. There are multiple strategies that can be employed to ensure we make the best of the falling market, but it is critical you reach out to get the process started as soon as possible.

Have a great week ahead.

Author: Joshua Haden-Jones, Private Dealing Account Manager.

The post New week, new lows appeared first on WorldFirst UK Blog.

Good morning,

Yesterday provided the most obvious example of just how frustrating it is to analyse and understand how the pound trades; an extended rebound whilst the dust had seemingly settled, with analysts expecting a bounce off of the symbolic lows of 1.08 on GBPEUR and 1.2180 on GBPUSD.

However, at around 13.30GMT, GBP took a wild lurch to the downside off the back of news a general election is to be called on November the 1^st, a mere few hours after a possible no-deal Brexit outcome on the 31^st.
The dust settled on the story over the course of the day – mainly as there was no immediate validation of the claim – but the fact GBP can plunge half a cent on rumour alone highlights clearly that political volatility is very much here to stay for the pound, which is possibly exacerbated by a slew of data being released at 9.30 this morning.

Whist positive data releases have offered the pound temporary gasps for air, they have been few and far between. Sadly, that means that, when less than encouraging data is released, the GBP suffers even more than expected – from bad to worse. The GDP figure is expected to stagnate, manufacturing slide from stagnant to -1.1% and industrial production dip from 0.9% to -0.2%. In essence, if the predicted numbers, or worse, are confirmed, the UK will be entering the final straight to a possible no-deal Brexit teetering on technical recession.

Across the pond, President Trump renewed his attack on what he sees as an over-valued dollar; announcing “They have called it wrong at every step of the way, and we are still winning. Can you imagine what would happen if they actually called it right?”

Whilst these online outbursts are hardly a new phenomenon for the president, the debate rages on the sidelines with regards to their seemingly increasing effectiveness. In normal times, the head of the executive would never seek to interfere with central bank policies, however, these are far from normal times, and the question posed now, is how independent can the Fed remain in the face of a global trade war?

With regards to trade wars, as mentioned in my article yesterday, “More fronts open in the global trade war”, another two economies announced measures aimed at remaining competitive after being dragged into the escalating global trade conflict. Denmark is now offering negative rate, or flat rate, mortgages, essentially allowing investors who are willing to lend funds for 30 years to achieve 0.5% in return and increase homeownership – creating possible bubble-like conditions in the housing market.

Germany provided a sizeable shot in the arm for EUR as news began to filter out that it could loosen it famously balanced books and issue new debt to finance green energy projects – leading to speculation extra cash will be made available for other projects, regardless of if the Bundesbank is in surplus or not.

It can be rather overwhelming to attempt to consider the many known, and in most cases, unknown factors which affect currency prices – especially in such volatile global conditions. It is always worth contacting your account manager to explore what is going on in the markets, as with GBP especially, price spikes can be dramatic and severe as seen yesterday. Give us a call before the weekend to explore ways of guarding yourself in the market and getting a detailed overview of what is going is putting your transfers at risk.

Have a great weekend.

Author: Joshua Haden-Jones, Private Dealing Account Manager

The post No respite for the pound appeared first on WorldFirst UK Blog.

Good morning,

Admittedly, the majority of the articles that I have produced recently have focused on the rapid deterioration of the pound in the face of continuing political pressure with regards to no-deal Brexit, snap elections and the single market.

For the majority of readers, this has been glum news indeed; but for those not holding sterling, to quote a client of mine yesterday, “It keeps getting better and better, thanks for the good news!”.

Whilst it is hard to disagree with them in regards to the sharp downtrend in the sterling, it is always, regardless of market sentiment, critical to consider both sides of the prices. Our account managers are trained to offer a reasoned and weighted response which is focused on making the best of the market and discussing risk on both sides of the coin.

As the global trade war escalates on a seemingly daily basis, with additional tariffs being placed on hundreds of billions of dollars’ worth of goods between the world’s largest economies – the USA and China – other economies are now being dragged into the fight.

Essentially, as more goods are covered by additional tariffs, more countries in the respective countries supply chains are affected, which has been seen by the international slashing of central bank interest rates across the board in quick succession. Even when taking the USA’s most recent cut and China’s currency devaluation; New Zealand have issued a 50bps cut, India has issued a 35bps cut and Thailand has issued a 25bps cut. The Norwegian Krone is now at it’s lowest levels since the 2008 financial crisis due to falling oil prices.

Trade wars rarely impact just the two countries at ‘war’.

As far as data goes to back up the sentiment, Chinese exports rebounded strongly, posting a sizeable year on year increase of 4.6% off the back of a weaker yuan, following its devaluation. The notable decrease is imports – down 1.3% as the domestic market withdraws from importing consumer goods produced by huge companies such as Apple.

As mentioned earlier, as global trade and monetary flows are being severely impacted, it is now more important than ever to develop an understanding of your foreign exchange risk on both sides of the price – give your account manager a call or drop them an email. There is always value in making hay while the sun shines, if even for a portion of your exposure.

Have a great day.

Author: Josh Haden-Jones, Private Dealing Account Manager.

The post More fronts open in the global trade war appeared first on WorldFirst UK Blog.