Daily Brief – UK Outlook

UK Outlook

With Sterling lower versus a rampant USD despite GDP rising 0.7% in Q3, it is worth looking at the outlook for growth as we go into the winter months. Expectations are for UK growth to falter as the effect of high energy bills weigh on the consumer. A further 25bp rate hike is expected in February, but as ever, the rate of inflation principally driven by the costs of energy and the war in Ukraine will be the driving factors. Difficult for Finance Directors delivering their 2027 Budget plans to their Boards with the usual host of underlying assumptions harder to estimate than usual.

GBP/USD 1.3240.

EES

As many readers who are not EU citizens will by now know, their permitted time in the EU is limited to 90 out of the preceding 180 days. The snag is that all too often when leaving the EU, Brits are experiencing dilatory officials neglecting to enter the exit date with the result that the entry date remains and subsequent days keep clocking up. If any reader is interested/worried about how many days they have left before embarking on a protracted trip to the EU, click on this link Check how long you can stay – EES

GBP/EUR 1.1973.

US Dollar

The current expectation is for a further and final 25bp rate increase in the US and one further 25bp hike by the European Central Bank. However, what is entering the conversation in the US is the potential for further rate increases in the US to the one pencilled in. That is worthy of comment since it would on current policy mark a divergence in interest rate management between the US and the EU. Right or wrong it further strengthened USD which is enjoying its strongest performance for 19 months.

EUR/USD 1.1055.

Digital EUR

With an agreement on the legal framework due to be agreed as soon as the middle of next week, the Digital EUR is set for a pilot program to begin in 2027 with a view to full introduction in 2029. It remains to be seen whether EU citizens will seize the chance of ditching their Mastercards and Visas with the convenience not to mention the 30 days credit of their credit cards in order to join the bandwagon of the Digital EUR. Some if not most credit card users value the monthly statement and audit trail provided by the conventional card issuers but paradoxically most of the debate around the introduction of the Digital EUR has centred around the question of anonymity or whether the State will be able to monitor expenditure and behaviour. Despite Mme President Lagarde departing early in February the Digital EUR project will remain on schedule as it is, we are told, not just an ECB project but an EU project.

Brent Oil USD 93.86.

Tonight’s The Night

This was of course a smash hit for Rod Stewart when it was released this day in 1976. As ever, due to the song being banned, it was certain that it would be such a success. The lyric that sent the censor’s blood pressure up into the stratosphere was the appalling line: “ Spread your wings and let me come inside.” That was enough to send the song to the Number 1 spot in the Billboard 100 in the USA while it only reached Number 5 in the UK.

Stay away from my window
Stay away from my back door too
Disconnect the telephone line
Relax baby and draw that blind

Kick off your shoes and sit right down
Loosen off that pretty French gown
Let me pour you a good long drink
Ooh, baby, don’t you hesitate ’cause

Tonight’s the night
It’s gonna be alright
‘Cause I love you girl
Ain’t nobody gonna stop us now

C’mon, angel, my hearts on fire
Don’t deny your man’s desire
You’d be a fool to stop this tide
Spread your wings and let me come inside ’cause

Tonight’s the night

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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