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End of year message from Island FX

Well we’ve reached that time of the year where I spend a brief time reviewing the year we are leaving behind and consider what is in store for 2024.

With the Russian invasion of Ukraine still in full swing, and the battle in Gaza, the world is no nearer to peace. I am still wary of China taking action in Taiwan at some point, although I said the same last year and fortunately, to date, nothing has happened. I am a little concerned that any additional conflicts will stretch western nations to a point where aid and military assets will need to be spread too thin.

We are already seeing aid to Ukraine being reduced, the problem there is that without aid the Russians may eventually take control of more of the country, and with aid it seems the best that can be hoped for is something of a stalemate that could last indefinitely. I fear the events in Israel and Gaza are driving a wedge between citizens in western countries which does nothing to help the peace and integration we all hope to see.

We’ve escaped 2023 with no major recurrence of Covid. OK, it is still lurking and people are still getting ill, but it is certainly less prevalent and less damaging than it was. There always has been illnesses that do the rounds and Covid now seems to be just another. Let’s hope it stays that way.

2024 has the potential to be rather volatile in the currency markets, with the timing of rate cuts likely to be the key talking point. The current weakness of the US dollar could well extend into 2024, with the Fed a little ahead of other central banks in raising the prospect of rate cuts. While the idea of rate cuts is fantastic, it does depend whether those rates are cut because they are no longer needed to be quite as restrictive, or whether it is to support an ailing economy. We’ve avoided much of the recession talk through 2023 but it is possible its rears its ugly head again sometime next year.

The UK could struggle more than others next year. Recent declines in our inflation is welcome, but we are still above inflation levels in other countries. Our GDP numbers remain disappointing, which raises the threat of poor growth, high inflation and high interest rates. It’s not a pretty combination. We also have the fun of a general election to look forward to. One can argue that the Tories haven’t done so well in the years they have been in power. They have had to contend with Covid and the subsequent inflation, they clearly cannot be blamed for either given those have affected other countries as well.

OK, mistakes have been made along the way but they have a rough set of issues to deal with. However recently it just seems that they have become disjointed, making some rather odd policies and as I type this I see they have backtracked on the recent increase in salary requirements before people can bring family members from other countries. Its not the first u-turn we have seen and it does nothing for their credibility. However, whether a labour government would be any better remains to be seen.

Well so far that’s all been a bit gloomy. I think that’s been a bit of a theme this year and although I try my best to find the more optimistic news, it is difficult at times. The problem with news is you do tend to report the bad stuff, but rarely the good stuff. I’m unlikely to write ’1,000,000 people have done good deeds today’ even though we know that does happen on a daily basis around the world. However I’ll make more effort to dish out some optimistic stuff next year.

I must say a couple of words to our clients. And those words are simply ‘Thank you’. Our business only works with you on board and as I said last year, our hope is that we repay the trust you put in us when you choose to work with us. We want you to be happy and comfortable, ifthere is ever anything more you need from us that we are not doing please do feel free to ask.

So we come to those of you who are not yet clients. I ask again ‘why not?’ Both Mark and I have many years’ experience in the currency markets, too many to think about sometimes. We are an owner-managed business, our aim is to help our clients tap into our experience to save them both time and money and make the tricky world of currencies far less of a headache in a friendly, pleasant and professional manner.

We are not into cold-calling or pushy sales techniques. We probably could be more proactive but I know you all get enough phone calls from FX companies and we don’t want to add to those. We know we can do a decent job but we do need the opportunity to prove it. Changing currency firms can be a worry, it is natural for people to stick with what they know. There is a limit to how many times we can say ‘we are good, trust us’. But as Ernest Hemingway said, ‘The best way to find out if you can trust somebody is to trust them’. Something of a motto of ours.

So I’d ask any reader who isn’t working with us to consider changing that in 2024. We are capable in all currency products, from simple spot transactions to the complex array of structured products. We are independent, which means we can select where our client accounts are held, according to their requirements, from the array of counterparties that we have carefully selected to work with. We’d like to work with you, we’d like to help you, we’d like to speak with you.

Enough rambling from me, I’ve already gone on far longer than I’d planned. All that is left to say is to you all, whether you are a client, a potential client, a reader or a friend, we wish you and your family a wonderful Christmas and a fantastic 2024.

We’re open for business between Christmas and New Year but unless anything significant happens I will give myself, and your inboxes, a break from this report until the new year. Enjoy the temporary peace!

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