Daily Brief – Bank of England

Bank of England

As expected, the Monetary Policy committee voted 6:3 to leave rates unchanged – for the avoidance of doubt that sizeable bloc of 3 voted to cut interest rates yesterday. That split reflects the dilemma faced by the Committee and the UK perfectly: growth is sluggish after a fairly decent 0.7% uptick in Q1 but was followed by a drop of 0.3% in April. On the other hand, annualised inflation stands at 3.4%, well above the 2% target and the forthcoming influences on that figure are almost all negative i.e. they will exacerbate inflation: Energy prices are up and rising; US trade tariffs are biting and in a couple of weeks will be un-paused for most of the world and then last but not least, the likelihood of US involvement in the Israel-Iran war is growing which is again inflationary. So the UK economy needs a shot of adrenaline in the shape of an interest rate reduction, but at the same time, the UK economy needs the tough love medicine of too high interest rates for the economic pace to curb inflation.

GBP/USD 1.3430.

Cook Islands

Before you reach for your atlas, or more likely click on a navigation app on your phone, the answer is close  to New Zealand, well sort of close being 1,894 miles away but closer culturally since the Cook Islands population is mostly Maori, and Maoris of course make up the indigenous NZ population. In February this year, the Cook Islands signed deals encompassing undersea mineral exploration, infrastructure, industry and tourism with China. That has just come to the attention of the NZ Government which has to date provided funding to the Cook Islands. That funding has just come to an abrupt halt with USD 11 million loans suspended. The Cook Islands want it to be re-instated and say that they want to be pals with both NZ and China. New Zealand is having none of it and are attuned to the Chinese agenda of finance first followed by influence.

GBP/EUR 1.1690.

US Dollar

With the further ratcheting up of tensions in the Gulf region, following the attack by Iran on an Israeli hospital, having punched through the much vaunted Israeli protective Golden Dome, markets have put aside all that talk about the Dollar’s day being done and started (again) talking about safe haven trades which inevitably have led them back to USD. Right now the currency markets are factoring in the rising probability of US intervention in the Iran-Israel war. Unsurprisingly, those other bellwethers are saying the same thing: Brent Oil up 1.26 to $77.67 while Gold remains firm at $3,384. US Dollar stronger and strengthening.

EUR/USD 1.1480.

The Mammal Society

It is a real society and yesterday it made the news in Somerset, SW England. Not in a small way at all, the story dealt in detail about how MS member Andrew Kirby from Glastonbury was having lunch when he thought he saw a fish swimming. In that part of the world unpacking that sentence might involve crystals, hallucinogenics, and Scrumpy, but despite the crowd’s mounting excitement at the Catcott Nature Reserve café, there is no suggestion of any of that-just the jaw breaking yawning boredom of the story so far. The fish turned out not to be a fish when Andrew Kirby had focused his shaking camera on the water: it was a mole taking a swim. Big news for the Mammal Society which prompted some in depth analysis of the strong forearms of a mole that naturally lend themselves to the mole adopting a powerful front crawl stroke over 26 meters. There’s plenty more but I will spare you.

EUR/JPY 166.98.

Ground Control to Major Tom

This day in 1969 David Bowie recorded this song entitled Space Oddity and released it a few weeks later to coincide with the Apollo 11 Moon Landing. Picked up and played with enthusiasm by the BBC the song was not only seared into the nation’s consciousness but enjoyed strong commercial success for pop pixie and shape shifter David Bowie.

Ground control to major tom
Ground control to major tom
Take your protein pills and put your helmet on

Ground control to major tom
Commencing countdown, engines on
Check ignition and may god’s love be with you

Ten, nine, eight, seven, six, five,
Four, three, two, one, liftoff

This is ground control to major tom
You’ve really made the grade
And the papers want to know whose shirts you wear
Now it’s time to leave the capsule if you dare

“this is major tom to ground control
I’m stepping through the door
And i’m floating in a most peculiar way
And the stars look very different today

For here
Am i sitting in a tin can
Far above the world
Planet earth is blue
And there’s nothing i can do

Though i’m past one hundred thousand miles
I’m feeling very still
And i think my spaceship knows which way to go
Tell me wife i love her very much she knows”

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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