Daily Brief – British Pound

British Pound

Despite the efforts of the press to write the story that UK PM SirKeir is on his last legs, Sterling on a 2 month high is unruffled so is not taking that story seriously. Damning with the headline “Lack of Replacement Options Keeps Starmer Safe-For Now” was Bloomberg yesterday which is not exactly encouraging for the PM. The silence from SirKeir’s colleagues is deafening so despite the lack of a credible alternative (Andy Burnham is not and nor is Wes Streeting who are the two most touted substitutes) it is evident that Ministers and MPs are looking for a re-set of the most recent Number 10 re-set if they are not to proceed with a political assassination followed by the coronation of a new as yet unidentified Labour supremo. And that would dent Sterling.

GBP/EUR 1.1540.

US Dollar

On the back of the all but inked in 25bp interest rate cut by the Federal Reserve, US Dollar traded at its low since the beginning of July versus EUR and a 10 month low versus AUD. The futures markets are discounting a total of 81bps of cuts by the end of January, and the ever present POTUS is urging a supersized 50bp cut this week. No change there. Yesterday we drilled down into the story behind the story and the likely implications if this week’s rate cut is seen as being driven by politics rather than the Federal Reserve’s independent economic viewpoint, but the direction of travel for US interest rates is clear: down.

EUR/USD 1.1795.

Global Tourism

Post Covid and despite the rocketing cost of airfares, global tourism is back on the radar as being a significant earner for Chancellors of the Exchequer in all countries. Just how many tourists contribute to individual countries’ hospitality, cultural sights, transport, and all the other indirect downstream industries is the subject of a 2024 report by the UNWTO or the United Nations World Tourist Organisation. Between 30 million and 40 million annual visits are made to the UAE which is at the foot of that band plus Thailand, Greece, Austria, Germany, Mexico, Turkey, and the UK at the top with 40 million. Italy commands 66 million in search of La Dolce Vita while the USA is only 72 million which given its relative size is surprising. However, at the top of the world tourism league lie Spain with 94 million-must be all those Northern Europeans in search of year round summer weather and France with 102 million. Despite the less than effusive welcome, frequent Gallic indifference and at times outright hostility to foreigners, France attracts the very most international visitors of any country. Maybe a clue there for its financially beleaguered President and his latest luckless PM: be nicer and those 102 million might spend more.

GBP/USD 1.3625.

Merck

US drugs maker Merck which trades as MSD in Europe has struck a blow at the UK Government’s claims that the UK is one of the best places to invest internationally by retorting that in their view the UK is not internationally competitive. If that were not bad enough given this week’s love in with POTUS being wined and dined by the great and the good not to mention the Royal Family on his second State Visit, Merck has canned a GBP 1 billion research facility due to open in London’s Kings Cross and laid off 125 scientists.

EUR/JPY 173.64.

Someone Like You

This day in 2011 the then highly popular singer songwriter Lewisham babe Adele went to Number 1 in the USA with this number as she did in Australia, Ireland, New Zealand, Finland, France, Italy, Poland, Switzerland, and the United Kingdom. In those days Adele had a better record of timekeeping and actually simply turning up, the absence of which later alienated many of her fans. Never mind here is one of the great Adele anthems:

I heard that you’re settled down
That you found a girl and you’re married now.
I heard that your dreams came true. 
Guess she gave you things I didn’t give to you.

Old friend, why are you so shy?
Ain’t like you to hold back or hide from the light.

I hate to turn up out of the blue uninvited
But I couldn’t stay away, I couldn’t fight it.
I had hoped you’d see my face and that you’d be reminded
That for me it isn’t over.

Never mind, I’ll find someone like you
I wish nothing but the best for you too
Don’t forget me, I beg
I’ll remember you said,
“Sometimes it lasts in love but sometimes it hurts instead,
Sometimes it lasts in love but sometimes it hurts instead”

You know how the time flies
Only yesterday was the time of our lives
We were born and raised
In a summer haze
Bound by the surprise of our glory days

I hate to turn up out of the blue uninvited
But I couldn’t stay away, I couldn’t fight it.
I’d hoped you’d see my face and that you’d be reminded
That for me it isn’t over.

Never mind, I’ll find someone like you
I wish nothing but the best for you too
Don’t forget me, I beg
I’ll remember you said,
“Sometimes it lasts in love but sometimes it hurts instead.”

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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