Daily Brief – Sterling

Sterling

No sooner had the financial press written that Sterling was on the skids due to the Chancellor being on the way out, than PM Starmer woke up to the need for some TLC for his beleaguered Chancellor and executed a handbrake turn to administer some gruesome bedside cheer to the apparently on life support Rachel Reeves. Sterling promptly clawed back the cent that it had dropped and the more naive market watchers concluded that all was well, nothing to see here etc. The rule in politics is that when a PM is forced to express confidence in his Chancellor, it is the forerunner of either a brief or possibly a long goodbye but definitely a good bye, which is why the London Times devoted many column inches to identifying Rachel Reeves’ successor yesterday.

GBP/USD 1.3652.

US Jobs

In a turn up for the US economy doomsayers, the US employment market had a day in the sun yesterday with 147,000 new jobs created in June. That sent USD up against EUR and Yen and also US Treasury Bond yields as the market concluded that Chair Powell is (even) less likely to accede to POTUS’ determination to bring US interest rates down quickly.

EUR/USD 1.1745.

Ole

Now here’s a stat that we thought we would be unlikely to report: Spain’s GDP per capita is now greater than that of Japan. In 2025 Spain was reported at $36,190 while Japan at $33,960. While Spain has done very well in 2024 scoring GDP growth of 3.2%, the reason for this statistical sleight of hand lies in the two countries’ currencies versus USD. Japan’s Yen has fallen 40% versus USD since 2021. The result is that having vied with Luxembourg at the top of the table in 2000, Japan is now in 38^th position. Where next/ The World Bank is predicting both around $42,000 in 2030 with Spain still ahead of Japan by $600 as Japan is hobbled by an ageing population and low productivity while Spain is reaping the fruits of a successful tourism industry.

EUR/JPY 170.46.

CR7

If Cristiano Ronaldo is reading this he will doubtlessly afford himself a smug smile to have a tax law in Italy named after his own low tax arrangements. This tax law applies to wealthy people who relocate to Italy who can sign up to pay a flat amount of EUR 200,000 per annum on overseas earnings for a period of 15 years. According to Henley and Partners, no less than 142,000 millionaires will be relocating globally in 2025 and Italy is an attractive destination and not just due to CR7. Italy will attract 3,600 new millionaires while Switzerland will only gain 3,000. The USA at 7,500 perhaps unsurprisingly will do well but fast growing Dubai with a zero rate tax will attract 9,000 in 2025. Back to Italy: apparently Italy already has 517,000 people worth more than $1M and 2,600 super rich worth more than $100M. London’s showing is rather less impressive having lost 30,000 millionaires in the past decade.  No wonder the Chancellor looks so sad.

GBP/EUR 1.1610.

Rikki Don’t Lose That Number

This gem by Pretzel Logic was played on this day in 1974 at what turned out to be the lads’ last gig in Santa Monica California. Despite riding high with hits in the charts and deservedly popular they were not to reconcile their musical differences for a further 18 years.

We hear you’re leaving, that’s okay
I thought our little wild time had just begun
I guess you kind of scared yourself, you turn and run
But if you have a change of heart

Rikki don’t lose that number
You don’t want to call nobody else
Send it off in a letter to yourself
Rikki don’t lose that number
It’s the only one you own
You might use it if you feel better
When you get home

I have a friend in town, he’s heard your name
We can go out driving on Slow Hand Row
We could stay inside and play games, I don’t know
And you could have a change of heart

Rikki don’t lose that number
You don’t want to call nobody else
Send it off in a letter to yourself
Rikki don’t lose that number

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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