Global Reach is becoming Corpay Cross Border, part of FLEETCOR, to broaden our client offering. Please contact our team or visit to find out more.

Beware of complacency

Harbouring the opinion that all will be well with the UK economy—and by extension, the Pound—in 2022 is an easy mistake to make. After all, we’re told this week to expect more positive UK data, with unemployment set to fall further towards pre-pandemic levels and inflation figures heading towards an expected 6.5% peak in April. Yes, rising prices and a tighter jobs market will raise the likelihood that the Bank of England will hike interest rates next month, but reasons to be bearish are mounting in the background.

The recent ‘partygate’ scandal has all but rendered Boris Johnson a lame-duck Prime Minister, with Kier Starmer’s Labour leading the Tories by 10 points in the latest polls. Anti-Boris opinion in the Conservative Party is spreading quickly, and several high-profile ministers have refused to speak in support of the premier. It could only be a matter of time before the Thatcherites in the party, i.e. Truss or Sunak, gain control, meaning a loss of support in the north to the once-again credible opposition.

Elsewhere, the government’s proposed tax hikes will come into effect in April along with Ofgem’s new energy price cap. This will certainly highlight the pressure on real incomes and likely curtail the BoE’s expectations for more interest rate hikes. Speculators who cut back bearish bets on the Pound at the back end of 2021 could return to a market fairly devoid of short positioning. And all of this is without factoring in ongoing risks around the UK’s trading relationship with the EU, which is set to hit Gross Domestic Product to the tune of 4.0%.

Bottom line: The Pound’s trade-weighted index dipped lower towards the end of last week, highlighting the UK currency’s sensitivity to negative headlines. Looking further afield, the political situation between Russia and Ukraine could affect a multitude of financial conditions, but at the very least, we could see broad-based USD strength pushing Cable back below the 1.35 handle.

The week ahead


Sterling held onto strength throughout the course of last week, with the currency up 1.50% against the US Dollar and 0.40% versus the Euro since the start of the year. Data released on Friday showed that UK Gross Domestic Product surpassed its pre-pandemic size in November, placing the spotlight on the Bank of England and its upcoming meeting in February. The introduction of ‘Plan B’ restrictions over the Christmas period could cloud the decision to raise interest rates in February as BoE chiefs wait for more colour on the impact of the Omicron variant; markets have priced in a 75.00% chance of a 25 basis-point hike. It’ll be a pivotal week for UK Prime Minister Boris Johnson as he attempts to claw back Tory party confidence by scaling back Coronavirus restrictions. 

  • UK Consumer Price Index and Core CPI y/y for December is forecast to come in at 5.20% and 3.90%, respectively, versus the November readings of 5.10% and 4.00%.
  • BoE Governor Andrew Bailey is due to speak before the Treasury Select Committee this Wednesday at 2:15PM.
  • GfK Consumer Confidence is expected to remain at -15 in January, with the official release due on Friday.
  • Retail Sales m/m data for December is predicted to print at -0.60% following November’s 1.40% gain.



The Euro managed to hold onto the $1.14 handle against the US Dollar last week, breaking above its previous range as the Greenback fell out of favour. The European Central Bank will be publishing its latest minutes release this week following President Christine Lagarde's comment that it will take the necessary steps to get inflation down to the 2.0% target. Markets are expecting just 10 basis-points in rate hikes this year. Coronavirus mask mandates have been strengthened on the continent as hospitals face the pressure of rising admissions among the unvaccinated.

  • The Eurogroup meetings are scheduled to take place all day today.
  • Eurozone and German ZEW Economic Sentiment data is due for release tomorrow and is forecast to come in at 29.2 and 32.1 this month, after printing at 26.8 and 29.9 in December.
  • The European Central Bank Monetary Policy Meeting Accounts will be published on Thursday.
  • Euro Area Consumer Confidence will bookend the week with analysts expecting a January reading of -9 to follow the -8 print for December.



The US Dollar Index has ticked 0.50% higher since Friday as the trend in US Dollar depreciation takes a breather. The Federal Reserve has entered a media blackout ahead of its upcoming meeting next week. New York Fed President John Williams has suggested the possibility of a rate hike in March would be appropriate given the current labour market and inflation picture. Elsewhere, Omicron continues to weigh on supply chains with infection rates yet to peak in the US despite the rapid spread of the variant; hospitalisations remain at elevated levels.  

  • Empire State Manufacturing data will be released on Tuesday, with analysts expecting a print of 25.0 versus December’s 31.9 release.
  • The Philadelphia Fed Manufacturing Index is due on Thursday and is projected to see a rise from the 15.4 reading in December to 19.9 this month.
  • US Unemployment Claims for the week ending the 15th of January are anticipated to read 221K following a reading of 230K for the week ending the 8th of January.
  • Existing Home Sales look on course to contract marginally in December to 6.42M from 6.46M in November.


If you'd like to discuss your foreign exchange requirements with one of our currency specialists, call us on +44 (0)20 3465 8200.