Daily Brief – British Pound

British Pound

Buffeted but at present largely unaffected by the political turbulence building in advance of Thursday’s UK local elections, increased tensions in the Middle East and its fragile economic position, Sterling is remarkably unmoved. The explanation lies in the shift in expectations for UK interest rates from cuts to increases which has buttressed the currency. If PM Starmer does fall on his clipboard after Thursday that will be (perversely) bad for the currency as the alternatives of Rayner or Burnham or Miliband are all considered by bond markets and therefore FX markets to be worse.

GBP/EUR 1.1580.

Europe-Red Sea-Middle East Express Service

Mediterranean Shipping Company or MSC, has announced a route that will bypass the Strait of Hormuz and the first vessel will depart Antwerp on Sunday. Ships will route from and to Northern Europe and dock at Aqaba in Jordan or King Abdullah Port or Jeddah via the Suez Canal in Saudi Arabia and will link to the rest of the Gulf by land transport. MSC claim that through their capillary network of routes that they can effectively replace the Strait of Hormuz route. What MSC was more reticent about in the release was how economic that service will be, but if it comes down to consumers paying more to receive goods or not receive them at all, such a consideration is secondary.

EUR/USD 1.1685.

EU-US Trade Deal

When a deal is not a deal is an uncomfortable revelation for EU Commission President Ursula Von der Leyen and the EU. Just a year ago at Turnberry, Scotland UVL was closeted with POTUS and subsequently emerged triumphant with a tariff of 15% on EU car exports to the USA and no other tariffs and a less clear but nevertheless a firm EU commitment to invest in the USA. That all came tumbling down at the end of last week when POTUS threatened to increase that car tariff from 15% to 25%. The EU is unilaterally indignant at the threat except for dissenters such as French MEP Aurore Lalucq who has taken the opportunity to point out that POTUS has exemplified why the EU should never have agreed a deal with POTUS in the first place. Which kind of misses the point, at least from an outside the EU perspective.

GBP/USD 1.3537.

Scottish Health

From the country that led in battered Mars Bars and pints of heavy, comes the news that Scotland leads the way in the UK vaping league. Greenock, research shows, has the highest density of shops registered to sell vapes per head of population in Scotland by a good distance. 20 outlets in the town centre plus the prison which is also licensed to sell vapes represent the market demand and shops that traditionally sold ironmongery, confectionary, or other high street staples have been supplanted by either increasing shelves of vapes or closed in favour of vape only product.

EUR/JPY 184.36.

Some Might Say

Oasis scored their first UK Number 1 with this number this day in 1995. Those were the days when those bad boys of Oasis were bad. Listening to a recent podcast when Liam droned on about only wanting a cup of tea made one (almost) nostalgic for the brothers in their heyday.

Some might say that sunshine follows thunder
Go and tell it to the man who cannot shine
Some might say that we should never ponder
On our thoughts today ’cause they hold sway over time

Some might say we will find a brighter day
Some might say we will find a brighter day (yeah)

‘Cause I’ve been standing at the station
In need of education in the rain
You made no preparation
For my reputation once again
The sink is full of fishes
She’s got dirty dishes on the brain
It was overflowing gently
But it’s all elementary my friend

Some might say they don’t believe in heaven
Go and tell it to the man who lives in hell
Some might say you get what you’ve been given
If you don’t get yours I won’t get mine as well

Some might say we will find a brighter day
Some might say we will find a brighter day (yeah)

‘Cause I’ve been standing at the station
In need of education in the rain
You made no preparation
For my reputation once again
The sink is full of fishes
She’s got dirty dishes on the brain
And my dog’s been itchin’
Itchin’ in the kitchen once again

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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