Since US interest rates were raised in mid-December Sterling to Dollar exchange rates have seen a drop of around 5 cents. With rumours that the US Fed will again raise rates two or even three times in 2016, the Dollar has the potential to strengthen further against the Pound. Companies trading with the USA will need to keep a close eye on the forex markets to plan currency hedging strategies over the next few months.
The UK Market is set to grow around 2%-2.5% over 2016. Financial Times interviews with a wide range of economists, professors and financiers on their opinion of the UK market plateauing around the 2% mark, received a broad consensus of agreement. While danger lurks around many areas of the global economy, the UK has established a solid basis for a small but steady growth this year.
With promise of a referendum from the Conservative Government to take place either in 2016 or 2017, this year will be one of uncertainty in regards to the UK’s future position in the European Union. Will we see an independent UK or one that is still heavily involved with the European nations? The issue of staying or leaving is one that abounds with different theories around scaring off foreign investment mirrored against the financial gains resulting from cutting EU membership costs. The uncertainty surrounding this issue has the potential to put investment and big economic decisions on ice in 2016, or if you believe in the Warren Buffet doctrine, this could be the time of opportunity!
The increase in consuming spending has stirred the UK economy. An increase in wages coupled with low inflation has set UK consumer spending on an upward trajectory which is good news for the Retail industry as well as Travel & Leisure. With wages again set to rise in 2016 and a new higher minimum wage coming into effect in April, consumer spending looks set for further growth. But, personal debt levels are high and consumer spending will be heavily influenced by the “feel good” factor. The Tories have a hill to climb yet to convince the spending masses that “feel good” times are here.
2015 wasn’t the best of years for emerging markets. Investors saw a continuing slow-down, fuelled by recession in Brazil and Russia, shrinking commodities prices and geopolitical issues in Europe and the Middle East. With these issues looking as if they are set to continue in 2016, there seems to be limited space for EM’s to recover and thrive. Where will these markets go next? The picture is a mixed bag – some say there may be a long-awaited uptick in those that have declined significantly over the last 5 years. India is the big hope under its new leadership and may well offset some of the Chinese, deceleration but there is little hope of any major force for recovery.