Daily Brief – Uncertainty and GBP

Uncertainty and GBP

This is the word that dominates market thinking at present. No surprise that like the US Federal Reserve, the Bank of England left UK interest rates unchanged with that uncertainty overshadowing all markets plus the expectation of UK inflation rising from its current 3% rather than falling to the target of 2%. Governor Bailey sensibly, given the mostly US led spate of announcements, said that the Monetary Policy Committee will be watching what happens in international markets very carefully in coming months. GBP, having opened the day at USD 1.30, initially fell before recovering once the news had been digested. Cuts in UK interest rates are not expected following yesterday’s rhetoric until Q3.

GBP/USD 1.2962.

ECB President

It may have been fairly self-evident but ECB President Lagarde gave her thoughts on the effect of US tariffs on the EU economy: a hit to EU growth of 0.3% and a further 0.2% to total 0.5% if the EU retaliates with tariffs on US goods. Then on top of that says Mme Lagarde EU inflation will rise by 0.5%. As a reminder, the forecast for EU growth in 2025 was only a slender 0.9% so it is clear although unspoken so far that the EU economic recovery is imperilled.

EUR/USD 1.0838.

Raz Blanchard

In case it has passed you by, the Raz Blanchard is one of the most powerful undersea currents in the world and it is just off Cherbourg, Normandy in the English Channel though of course, French. Normandie Hydroliennes is building NH1 which consists of Jules Verne like undersea turbines that are going to produce clean energy sufficient to power 15,000 homes in the region.

GBP/EUR 1.1958.

Russian Tourists

Where are Russian tourists flocking given that the EU is pretty much closed to them? The answer is Japan, where they can go visa free. 100,000 Russians visited Japan in 2024 and that number is expected to double in 2025. So for those readers planning to enjoy the Sakura or cherry blossom period next month, get ready to share it with record numbers of Russians now that the Rouble has strengthened on the back of strengthening relations between Moscow and Washington. A further example of the law of unintended consequences.

EUR/JPY 161.35.

Like a Prayer

This day in 1989 Madonna outraged some but wowed most with the release of this album. Never shy of pushing the boundaries and constantly re-inventing herself, Madonna strutted her stuff and as well as being a class dancer could not only sing but had a great voice – unlike many of her peers.

Life is a mystery
Everyone must stand alone
I hear you call my name
And it feels like home
When you call my name, it’s like a little prayer
I’m down on my knees, I wanna take you there
In the midnight hour, I can feel your power
Just like a prayer, you know I’ll take you there
I hear your voice
It’s like an angel sighin’
I have no choice
I hear your voice
Feels like flying
I close my eyes
Oh God I think I’m fallin’
Out of the sky
I close my eyes
Heaven help me
When you call my name, it’s like a little prayer
I’m down on my knees, I wanna take you there
In the midnight hour, I can feel your power
Just like a prayer, you know I’ll take you there

Have a Great Weekend! 

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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