Daily Brief – Sterling

Sterling

Domestic UK readers will understandably be wondering how Sterling is faring as a stand-alone country currency, beset by recent soaring Jet Fuel, Natural Gas, and of course Oil prices. The answer, at present at least, is that it is holding up well partly on Governor Bailey of the Bank of England’s comments about interest rates not coming down much, but equally that the markets have got ahead of themselves by sending them up too sharply. This Goldilocks scenario plus the UK’s status as an on-off safe haven given PM Sir Keir Starmer’s self-distancing from the Special Relationship of the USA means that Sterling has not only remained stable against both the EUR and the USD, but is now this morning a beneficiary from the 2 week ceasefire agreed last night.

GBP/EUR 1.1480.

IMF

The Head of the International Monetary Fund, Kristalina Georgieva had some sanguine words for markets ahead of the POTUS ultimatum that was due to expire last night (or not as it turned out). Irrespective of the peace talks progressing and the cessation of hostilities, it will take some time for prices and supply disruption to be restored. Therefore, the IMF expects higher inflation and lower growth. Next week sees the regular Spring meetings in Washington of the World Bank and the IMF and with Qatar estimating that it will take 3-5 years to restore 17% of its LNG natural gas production, a cut of 13% in the global oil supply in the past weeks and knock on effects into helium and fertiliser products, there is plenty on the agenda. Yesterday was the IMF warning that the effects of the war will run on for a long time irrespective of the cliff edge ultimatum.

EUR/USD 1.1704.

UK and the EU

Yesterday marked the day that the Financial Times emboldened by some welcome Spring sunshine decided in a return to its long held mantra openly to encourage the weakened UK Labour Government to adopt a tangible and bold new idea. Based on the confident assertion from the FT that the “vast majority” of the UK regretted leaving the EU and wanted to re-join it, the Financial Times concluded that this was going to be the equivalent of the Monopoly Get Out of Jail free card for Sir Keir Starmer. Although the piece concluded that the path to a UK/EU rapprochement and mutual true love was unlikely to be smooth, the argument seemed to be based on the premise that Sir Keir’s government had precious else to distract the UK voting public from the likely annihilation of the Labour party in next month’s local elections. There is also the not so small matters in no particular order of the UK needing to convincingly reverse the Brexit vote, the EU being prepared to countenance a UK return, the conditions that would accompany such a UK policy reversal and last but not least the fact that the UK would need to join the Euro.

GBP/USD 1.3438.

Taking the p+ss

At UWE or the University of Western England there is a project underway to turn human urine which as well as less useful waste contains potassium, nitrogen, and phosphorous into fertiliser. The Project team has been collecting urine from events like the London Marathon and the Boomtown pop Festival, and after treating it on site and turning it into synthetic fertiliser which incidentally does not smell, have tested it out in the growing of grass and crops. Now partnering with Welsh Charity, Stump up for Trees they plan to grow trees in the Brecon Beacons near Abergavenny and are a step or two on the way to addressing the increasing fertiliser shortage due to the Iran war through the recycling of pee.

EUR/JPY 185.01.

What Took You So Long?

In case it passed you by, 25 years ago today in 2001 Spice Girl Baby Spice Emma Bunton scored her first UK Number One. Even more remarkable than that, this was the fourth time that a Spice Girl had a Number One Hit. Truly remarkable or more pertinently No No No.

Yeah, yeah, yeah

Oh, talk to me, can’t you see
I’ll help you work things out?
Oh, don’t wanna be your enemy
And I don’t wanna scream and shout

‘Cause, baby, I believe in honesty
A man that’s strong and true
I shouldn’t have to say now, baby
That I believe in you

What took you so long?
What took you all night?
What took you forever to see I’m right?
You know I treat you so good
I make you feel fine
And no, I’ll never give it up this time
No, no, no

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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