Daily Brief – Brent Oil

Brent Oil

With oil breaking USD 126 yesterday morning on the back of failed arrangements for peace talks and the likelihood of a resumption of US-Iranian hostilities, the news that the UAE are withdrawing from both OPEC and OPEC+ citing the protection of their own interests might have been expected in more normal times to have driven prices lower, but these are not normal times. Having said that, later in the day Brent Oil slipped to USD 114 but expectations for a considerably higher price have not gone away.

GBP/USD 1.3558.

European Central Bank

You can be sure that the debate at yesterday’s ECB meeting was brisk to say the least given that the EU inflation target is a hard 2% and er hmm the latest EU inflation rate stands at 3%. With Germany having halved its 2026 forecasted growth rate from 1% to 0.5% and France reporting a stuttering economic picture, the locomotives that might otherwise be expected to haul the EU economic train along are parked in a siding. That means that the Council which can no longer argue that the 2-month energy price rises are a blip, is now pinning its current policy on the hope that reason does prevail between the USA and Iran and that POTUS listens rather more to the US electorate than Israel’s President Netanyahu. So, in summary, to no-one’s great surprise EU interest rates were left unchanged.

EUR/USD 1.1741.

UK Interest Rates

The argument that the Bank of England should get ahead of the rising inflation picture rather than adopt the wait and see approach may have been debated, but in the end, despite UK inflation of 3.3%, the MEPC voted to leave interest rates unchanged. The standout dissenting member, economist Huw Pill was outnumbered by 8 of his colleagues and despite Governor Bailey correctly identifying the upside inflation risk in his presser afterwards, the MEPC stood firm(ly) on their hands.

GBP/EUR 1.1570.

British Pound

As we enter the last week before the UK local elections, it might be as well to reflect on whether the political risks associated with a hugely unpopular incumbent UK government have been properly priced into the market. On the upside for Sterling: one would not find many takers for the argument that the Labour Government is about to receive a ringing endorsement from the electorate. Nor would one find many supporters for PM Keir Starmer remaining at the helm. Whether one is a Wes Streeting supporter or not, most believe that if Sir Keir departs, he will be shortly followed by Chancellor Reeves. Then there are the candidacies of Angela Rayner and Andy Burnham to join or even lead the Cabinet. Again it would be difficult to find many if not any proponents that either or both would be good for GBP. It may not be precisely the right moment to sell GBP and buy EUR or USD, but it is hard to construct a case for buying GBP and selling EUR or USD.

GBP/NZD 2.3053.

Mick Fleetwood

He may be worth USD 30 million today but on this day in 1984 Mick Fleetwood filed for bankruptcy having ingested industrial quantities of cocaine and in his more lucid moments spent all the considerable amounts that he had earned in the first 15 years of his career on failed investments and unwise real estate, winery and restaurant ventures. 42 years later, MF lives mostly in Hawaii but maintains his more than blemished investment record which is why bandmate Stevie Nicks is worth USD 120 million and he’s not. But the stories that he could tell….

If I could turn the page
In time then I’d rearrange just a day or two
Close my, close my, close my eyes
But I couldn’t find a way
So I’ll settle for one day to believe in you
Tell me, tell me, tell me lies

Tell me lies, tell me sweet little lies
Tell me lies
Tell me, tell me lies
Oh no-no, you can’t disguise
You can’t disguise
No, you can’t disguise
Tell me lies, tell me sweet little lies

Although I’m not making plans
I hope that you’ll understand there’s a reason why
Close your, close your, close your eyes
No more broken hearts
We’re better off apart, let’s give it a try
Tell me, tell me, tell me lies

Tell me lies, tell me sweet little lies
Tell me lies
Tell me, tell me lies
Oh no-no, you can’t disguise
You can’t disguise
No, you can’t disguise
Tell me lies, tell me sweet little lies

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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