Daily Brief – UK Interest Rates

UK Interest Rates

Expectations were for the Bank of England to leave interest rates unchanged yesterday morning given that UK inflation stands at 2.6% and while above the 2% target, is insufficiently so to warrant action. In recent years, the BoE has been criticised for not being sufficiently forward looking, and that represented the argument for the Monetary Policy Committee anticipating the inflationary effects of higher energy prices and in particular garage forecourt petrol prices as we head into the winter months. With no sign of a cessation of US-IRAN hostilities in the Gulf, the call to hold rates unchanged was closer than was appreciated in the voting of leaving rates on hold at 6-3.

GBP/USD 1.3467.

Oil

The easier Brent price earlier in the week has been overtaken by the increase of military action by the USA and for the past 2 days, oil has been on the rise with Brent now at USD 92. The perception internationally is that the Strait of Hormuz is open but it is only open in a limited manner. More concerningly still is that for the first time on Wednesday, Saudi Arabia retaliated for Iran attacking Saudi oil assets with drones by attacking Iran paramilitary forces in Iraq. This follows Kuwait also retaliating for Iran attacking Kuwaiti targets last weekend. The concern geo-politically arises from the spreading of the conflict more widely in the region and the impact on both a much larger area of hostilities but also the impact on the global economy.

EUR/USD 1.125.

British Pound

With the continuing hostilities and the escalation in the past few days, US Dollar has firmed then weakened on the Federal Reserve meeting decision, and Sterling has suffered and then bounced back on a weaker USD yesterday afternoon. For the moment at least, the markets are being rather more patient with new UK PM Andy Burnham than they would normally be and certainly more patient than they were with previous PM Keir Starmer. As the new Prime Minister unveils some populist priorities and hurtles around the UK with obviously a northern bias to both, it is only a matter of time before answers will be sought as to what he stands for, since the UK electorate did not have the opportunity to find out through a General Election. In just 3 months there will be no further room for obfuscation as that is when the UK can expect new Chancellor John Healey to deliver his Autumn Budget and make the numbers add up for his boss’ passion projects.

GBP/EUR 1.1683.

Gotham City

Batman the sequel will be filmed in Glasgow next month and Kingston Bridge, North Street and Newton Street will be turned into Gotham City. Fans of the Dark Knight will be able to watch Robert Pattinson don the Batman kit and rocket around the streets on his Batcycle. Doubtless, Glaswegians will take all this excitement in their customary stride armed with battered Mars Bars and pints of heavy to help Batman ward off the dark force enemies of the Caped Crusader.

EUR/JPY 183.80.

Living Doll

The evergreen perma-tanned British singer phenomenon that is Cliff Richard had his first Number 1 hit with this song this day in 1959 that became the top selling single in the UK that year. Then, the fresh-faced pop pixie who cunningly had adopted a mid-lantic accent that seemed unbelievably exotic and full of promise to a country that had only recently emerged from rationing introduced in WW2 was different and wholesome. Cliff Richard 67 years later remains unchanged: a living doll.

Got myself a crying, talking, sleeping, walking, living doll
Got to do my best to please her just ’cause she’s a living doll
Got a roving eye and that is why she satisfies my soul
I got the one and only walking, talking, living doll

Okay guys, ready Biff?
Completely ready when you are, Shakey
Neil?
Does anybody know where the toilets are?
Mike?
Does all this money really have to go to charity?
Yes it does Michael
Hi Cliff, it’s me
Who are you?
Ooh, great joke your majesty

Got myself a crying, talking, sleeping
Walking, living doll (Living doll)
Got to do my best to please her just ‘
Cause she’s a living doll (Living doll)
I got a roving eye and that is why she
Satisfies my soul (Satisfies my soul)
Got the one and only walking, talking, living doll

Take a look at her hair, well it’s real and
If you don’t believe what I say just feel
Gonna lock her up in a trunk, it’s no
Big hunk and steal her away from me
Got myself a crying, talking, sleeping, walking, living doll

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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