British Pound
In this update to the two Special Reports on FX hedging of global equity portfolios with nine different home currencies, published in 2017, we show that BCA’s proprietary dynamic FX hedging strategies have consistently added value to global equity portfolios. We value quant models as an important input in our decision-making process, but we do not suggest any investor to slavishly follow them, because models cannot capture all the important fundamental changes, as demonstrated in the details of this report.
Time is running out on the Bank of England’s tightening cycle. UK economic growth is flirting with recession, unemployment is rising, house prices are contracting and inflation is decelerating. Markets are overestimating the eventual bottom in UK inflation, and thus are also underestimating how much the Bank of England will eventually cut rates in the next easing cycle, which could begin as soon as H1/2024. The backdrop is turning increasingly positive for Gilts on a medium-term basis, while the overbought pound is due for a breather.
The DXY will continue to have near-term upside, as economic growth holds up in the US, while it deteriorates in other parts of the world. Remain constructive on the DXY at current levels, but pivot to a short position on evidence US growth is boosting the rest of the world.
This report reviews our key calls for major currencies, in light of recent data releases.
In this short weekly report, we review some of our favorite FX trades.
In this Month-In-Review report, we go over the latest G10 data releases and rank currencies’ fundamental standing based on our updated macroeconomic model.
The change in the BoE’s tone has likely altered the path for sterling. In this report, we explore if the BoE’s lens for monetary policy is justified, and provide some targets for the pound.
The change in the BoE’s tone has likely altered the path for sterling. In this report, we explore if the BoE’s lens for monetary policy is justified, and provide some targets for the pound.
In this week’s review, we look at recent data and its impact on currency markets.