Daily Brief – UK Growth

UK Growth

A fillip for the UK and Chancellor John Healey when the IMF marked up its report card for the UK with anticipated 2026 growth of 1.3%. Glossing over the stubborn consumer price inflation of 3.3%, pundits and politicians were swift to declare it as being good news. The Bank of England expects inflation of 4%+ in Q1/Q2 next year. Unemployment is forecast to remain above 5% at 5.3%. Risks on the near UK horizon are as follows: extreme weather( El Nino); cyber attack(s); attacks on energy infrastructure and supply channels according to the IMF. We would add in no particular order: AI, geo-politics, EU elections, US mid-term elections and the untested UK Prime Minister and Chancellor.

GBP/USD 1.3244.

EUR

Net EUR shorts in the market currently stand at their highest level since February 2020 with the EUR having the dubious distinction of being the worst performing G10 currency in the past month. The likeliest culprit for the EUR woes is the French fiscal premium with the likelihood of France’s current administration having a Damascene moment and getting a grip on its debt position remaining unlikely in the near term. Right wing presidential candidate Marine Le Pen’s promises to address this situation are not being given any weight by the market-so far. Meanwhile France’s Socialist party is intent on derailing the 2027 budget debate in parliament-and that is just because PM Sebastien Lecornu is proposing to reduce the budget deficit by 5%. Cutting healthcare spending and capping pensions are not measures that Socialist leaders are willing to even contemplate, let alone debate.

GBP/EUR 1.1834.

Oil

Hedge fund legend Paul Tudor Jones made a rare pronouncement yesterday afternoon: oil in his view could well rise USD20-25 based on the rationale that if POTUS could have tackled and resolved the Iran war ahead of the mid term elections, he would have done so already given the clear impact on, and the unpopular nature of, high petrol prices for the American people.

Brent Oil USD 105.91.

Listening

This is the UK’s Lib Dem Ed Davey leader’s offer to his party who are minded to contemplate (carefully) launching a coup against him: he is in listening mode. Followers of the UK political scene will recall that once installed in office, PM Andy Burnham embarked on a summer UK listening tour. No sign yet of whether he did, or even what he heard as he travelled around the UK, but it is fast becoming a theme on the left leaning side of the House of Commons. No sign that Nigel Farage or Kemi Badenoch let alone Rupert Lowe have plans to board a bus/bike and get out there and listen-they all say they know what they would do if they were in office. There we have it, the PM in office, if not yet fully in command of his brief, is still in listening mode-maybe that is why we can see the price of petrol on our smart phones at petrol pumps. The people have spoken.

EUR/USD 1.1192.

Born to be Wild

Released in 1968 and featuring on the soundtrack of cult movie Easy rider, this song epitomised the counter cultural out on the road long haired drug culture of the time. 50 years later on this day in 2018 the group announced their final performance with none of the original line up still there at a concert at Baxter springs, Kansas USA. It wasn’t their final concert of course since they came back in 2019-still living the dream.

Get your motor runnin’
Head out on the highway
Lookin’ for adventure
And whatever comes our way
Yeah Darlin’ go make it happen
Take the world in a love embrace
Fire all of your guns at once
And explode into space

I like smoke and lightning
Heavy metal thunder
Racin’ with the wind
And the feelin’ that I’m under
Yeah Darlin’ go make it happen
Take the world in a love embrace
Fire all of your guns at once
And explode into space

Like a true nature’s child
We were born, born to be wild
We can climb so high
I never wanna die

Born to be wild
Born to be wild

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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