I have worked through some momentous changes since starting out in the City of London in 1985 including Chernobyl; the fall of the Berlin Wall; Mandela’s release from prison; the Gulf War; German reunification; the collapse of the Soviet Union; the dot.com crash; 9/11; 7/7; the collapse of Lehman Brothers and subsequent credit crunch; the eurozone debt crisis and the bail-outs of Portugal, Italy, Ireland, Greece and Spain; the Brexit vote; and Trump but cannot honestly recall a more volatile, chaotic year in my working lifetime to date than 2022.
Key Interest Rates
The UK sees our third prime minister within 12 months, the highest tax take since 1945; the biggest drop in living standards since records began in 1956; inflation hit a 41-year high; interest rates are at a 14-year high; and 1.2m days have been lost to strike action since June, the highest number for any 5-month period since May 1990 with 417,000 lost days just in October, the highest monthly loss since November 2011.
In the USA, the Fed has increased interest rates to 4.5%. Their highest level since 2007 in response to inflation hitting its highest level since 1981. The mid-term elections resulted in even more of a political muddle than existed before and the country is now coming to terms with the recent big freeze weather bomb that saw temperatures drop to record low temperatures including – 45C (that is not a typo!) in Montana.
Putin’s invasion of the Ukraine in February has led to the biggest land war in Europe since 1945; inflation hit 17% in Holland and the highest level in Germany since the 1950’s, pushing the ECB to raise interest rates to their highest level since 2008 and a big corruption scandal is still unfolding in the corridors of the EU parliament in Brussels.
According to the WGC (World Gold Council), global central banks bought more gold in the first nine months of 2022 than all the annual totals since 1967. With almost 400 tonnes of gold being bought just in the third quarter of this year. Despite this, gold prices hardly shifted in 2022. In contrast, oil prices are down over 9% on the year and a remarkable 57% in the second half of 2022. Plus Europe’s natural gas prices have now fallen to pre-Ukraine war levels.
Key Exchange Rates
Pound sterling to the Euro
Fell over 9% in value since hitting a 2022 high back on the 7th of March. Finishing 2022 over 5% down on the year, at a 3-month low.
Pound Sterling to the US Dollar
Has fallen an astonishing 28% since hitting a 2022 high on 13 January and is down over 12% on the year at a one-month low.
Pound Sterling to the Australian Dollar
Has fallen over 16% since hitting a 2022 high back on 29 January and is down over 4% on the year.
Most analysts are predicting that 2023 is going to be at least as volatile a year as 2022 has been. Forecasting sharp falls in the housing market as the era of cheap money finally comes to an end; erratic energy markets; the ongoing war in the Ukraine; North Korea; China and Taiwan.
In the UK, we have local elections on 4 May. Elsewhere, there are important elections in Switzerland in October. In the USA in November. Spain in December and federal elections must be held in New Zealand before January 2024. More rises in interest rates are expected throughout the globe including the US Federal Reserve and the European Central Bank. Most likely at a slower pace than we have seen in 2022 as evidence suggests inflation has peaked.
In contrast, the Bank of England is signalling a softer tone. This could undermine still further the attractiveness of the Pound Sterling in the global currency markets in 2023.
- US government scientists have made a breakthrough in the pursuit of limitless, zero-carbon power. This was by achieving a net energy gain in a fusion reaction for the first time.
- The City of London retained second place behind New York in the league table of funds under investment management with $13.7tn of assets under management.
- In early December, the UK and USA agreed to double UK gas imports from the USA. Further diminishing the importance of Russian gas supplies.
- Investment in fintech in the UK grew sevenfold to $37.3bn in 2022. More than the rest of Europe, the Middle East and Africa put together. New figures show that fintech venture capital funding in London since the start of the year has reached $9.5bn (£7.8bn). That\’s higher than anywhere else in the world.
- Britain’s international trade in goods and services has increased, whatever time-period you choose. In real terms or in current prices since Brexit.
- The UK’s tech sector has retained its place as Europe’s leading centre and the third largest in the world after the USA and China.
- The first space mission on British soil has been given permission for lift off in the coming weeks after being granted a licence.
Of course, currency market volatility can bring trouble but with careful monitoring can also bring opportunity. At Cosmos, we provide our clients with a relationship not a transaction-based service. We are pro-active not reactive.
We offer local collection accounts in the USA, Canada, the EU and of course the UK to save clients
further time and money with their transfers.
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Please call us on 0044 (0)300 124 6409 or click here to email and discuss your individual currency requirements.
This week’s quote is from Voltaire
“I have decided to be happy because it is good for my health”.