Daily Brief – Sterling and UK Politics

Sterling and UK Politics

With former UK Armed Forces Minister Al Carns having got into line yesterday morning and backed Andy Burnham, rivals to his leadership bid dwindled to… zero. So barring AB changing his mind or falling ill as newly minted Barclays CEO Michael O’Neill memorably did in 1999 and consequently never to take up the job, Andy Burnham will fill the position of UK Prime Minister that he has long yearned for on Monday July 20^th. In advance of that, now that the parade ground has been cleared of rival candidates, we can expect that a new Chancellor will be appointed once Rachel Reeves has been reshuffled into a lesser, but what will be spun as a significant other cabinet role. The identity of the new Chancellor will be the single most significant political factor affecting Sterling as it will reveal not so much about the appointee but about Andy Burnham’s mindset. It is becoming clear that unlike his predecessor with his dearth of ideas, the newly crowned Prime Minister has a plethora of ideas which need to be sifted, prioritised or better still, discarded.

GBP/USD 1.3414.

US-Iran

Shaken out of its Summer torpor before it had even properly got into it, the market woke up to the reality on Wednesday that a choreographed US-Iran Peace Deal at the end of the month was off, and worse still the Ceasefire Deal was also off and that hostilities had recommenced. Oil shot up by more than 6% and USD strengthened. 2 days later, Brent stands at USD 77.24 and the Dollar is trading in a half cent range at 1.14. Uncertainty is now at the forefront and wearily analysts are re-assessing how markets will play out in the next 3 and 6 months up until year end. Stand by for more to come out about inflation and what the Federal Reserve will do to resolve it. It all looks very much like USD will remain strong and EUR will have some of its predicted late Summer lustre removed.

EUR/USD 1.1434.

EU House prices

A rule of thumb is that EU households spend almost 20% of disposable income on housing but in some countries that can be as much as 30%. In Q1 2026 EU house prices rose 5%, rents increased 3%, and EU inflation was 2.3%. In the year to end Q1 2026 Portugal saw house prices rise 17.8% while Bulgaria, Slovakia, and Croatia all saw rises of 14%+. Of the larger economies Spain was up 12.8% while Italy rose 5.2%, France unchanged and Germany up 1.4%. With those sorts of increases plus the higher oil price it is only a matter of time for it to show in the inflation stats.

GBP/EUR 1.1732.

Bordeaux 2025

Described as “a good to very good year”, 2025 has some Bordeaux bargains and nowhere more in evidence than contained in the in bond offerings from The Wine Society thewinesociety.com which was issued on Wednesday. At the red dozens bargain end are Ch Cissac at GBP 102 and Ch Beaumont at GBP 110. Red sixes include Ch Ormes de Pez at GBP 102, Ch Batailley at GBP 145 and Ch Haut Bages Liberal at GBP 157.If dry White Bordeaux is your thing then Ch Latour-Martillac Blanc at GBP 132 or Petit Smith Haut Lafitte at GBP 186 should be snapped up.

EUR/JPY 185.63

Afternoon Delight

As Michael Caine (aged 93 if you are wondering) is wont to say: not many people know that, but the phrase “afternoon delight” which has come to mean an afternoon romantic liaison, was inspired by a happy hour menu item on a Washington DC, USA restaurant. Back in 1976 on this day, Starland Vocal Band scored a Number One with the song of that name which, despite the lyrics lacking much, resonated, but maybe that was because there wasn’t much happening on July 10 1976.

Gonna find my baby, gonna hold her tight
Gonna grab some afternoon delight
My motto’s always been “When it’s right, it’s right”
Why wait until the middle of a cold, dark night
When everything’s a little clearer in the light of day
And we know the night is always gonna be here anyway?

Thinkin’ of you’s workin’ up my appetite
Lookin’ forward to a little afternoon delight
Rubbin’ sticks and stones together make the sparks ignite
And the thought of lovin’ you is gettin’ so excitin’

Skyrockets in flight
Afternoon delight
Afternoon delight
Afternoon delight

Started out this mornin’ feelin’ so polite
I always thought a fish could not be caught who didn’t bite
But you got some bait a-waitin’ and I think I might
Like nibblin’ a little afternoon delight

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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