Daily Brief – European Central Bank

European Central Bank

Tonight in Berlin, President Lagarde of the ECB will make a speech to the Association of German Banks at their 75^th Anniversary meeting. This will be a well-attended and closely followed address since Thursday this week is the ECB meeting, and the Council is confronting much higher inflation and a markedly slowing economy. The correct response given the ECB’s mandate would be to raise interest rates to tackle inflation. Much more likely is that after much deliberation, interest rates will be left unchanged this week at 2% in a wait and see move with the aim to placate the economic slowdown lobby.

EUR/USD 1.1732.

Bank of England

Also meeting this week on Wednesday and Thursday is the BOE Monetary Policy Committee, which faces the same rising inflation and slowing economy picture as the EU. There is one key difference and that is as a stand-alone economy with a stand-alone currency, the UK is vulnerable to a vicious circle if the market perceives that the BOE is not in the front seat. This occurred after the Pandemic when the BOE failed to confront the resultant inflation fast enough. Despite this recent failure the expectation is that the BOE will sit on its hands this week rather than raise interest rates to confront the 3.3% inflation head on.

GBP/USD 1.3520.

Politics and the Pound

Perversely, the Pound is better protected, at the moment at least, by PM Starmer clinging on to office despite the Opposition parties (there are at least 3 of those plus Plaid Cymru and the SNP) calling for him to go and them being joined by the Government’s own party at the end of last week. We understand that Sir Keir does not do mails, Red Boxes nor calls over weekends which may be best in the current circumstances. The reason Sterling is better if not best served by Sir Keir’s dead hand on the tiller is that the alternative of Angela Rayner who polls twice as much as Wes Streeting would “crater” the Pound in the view of Swiss bank UBS on Friday night.

EUR/GBP 0.8660.

Sloth World

Only in Tampa, Florida USA: if one has exhausted the delights of Disney and want to experience a Slotharium in a rainforest environment, head to Sloth World where on display (maybe) are plenty of 3 toed sloths. It’s worth checking first before promising the kids, as Sloth World has form in failing to keep its constantly revolving door of sloths alive having lost sloths arriving from both Peru and Guyana. Last week they lost 31 from a virus but the common theme in all this has been that Florida is simply too cold for the sloth and so the immigrant sloths have been falling off their perches-literally. 

EUR/JPY 186.87.

Killer Queen

It may not count as much of an anniversary but this day just 3 years ago in 2023 a pair of “the shortest tightest” leather shorts ever worn by Freddie Mercury of Queen was auctioned and after fierce bidding was knocked down for GBP18,000 having been worn by FM at Queen’s sold out concert in Birmingham on December 6 1980. That’s the definition of pulling power: having your shorts go for £18K 32 years after departing for the recording studio in the sky.

She keeps her Moët et Chandon
In her pretty cabinet
“Let them eat cake, ” she says
Just like Marie Antoinette
A built-in remedy
For Khrushchev and Kennedy
At anytime an invitation
You can’t decline

Caviar and cigarettes
Well versed in etiquette
Extraordinarily nice

She’s a Killer Queen
Gunpowder, gelatine
Dynamite with a laser beam
Guaranteed to blow your mind
Anytime

Recommended at the price
Insatiable an appetite
Wanna try?

To avoid complications
She never kept the same address
In conversation
She spoke just like a baroness
Met a man from China
Went down to Geisha Minah
Then again incidentally
If you’re that way inclined

Perfume came naturally from Paris (naturally)
For cars she couldn’t care less
Fastidious and precise

She’s a Killer Queen
Gunpowder, gelatine
Dynamite with a laser beam
Guaranteed to blow your mind
Anytime

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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