Morning Brief – British Pound

Humphrey Percy
Chairman and Founder
Wed 21 Feb 2024

British Pound

There really was something for everyone in Bank of England Governor Bailey’s comments yesterday. Firstly he said that the BoE was comfortable with the market’s view of the decline in UK interest rates -meaning one presumes both on extent and timing. Then he followed it up by saying that the UK labour market was strong and that there were signs of an upturn in the economy which normally would suggest that UK rate cuts would be less and also be pushed out further. Then to finish the Governor said that the timing and extent of those UK rate cuts was…unknown. Unsurprisingly on these somewhat mixed messages, GBP fell and yields in British Government gilts dropped.
GBP/EUR 1.1665.


Back in 2002, Kosovo adopted the EUR despite being a member of neither the EU nor the EUR in a move that was endorsed by the European Central Bank. Before that, the most commonly used currencies in Kosovo were the Deutschemark, Albanian Lek and the Swiss Franc. After the introduction of the EUR in 2002, the Serbian Dinar also continued to be widely used especially by the Serbian communities living in Kosovo. Now effective 1st February 2024 the use of the Serbian Dinar has been banned in Kosovo and this week thousands of Serbs in Kosovo have been demonstrating against this measure. The move has also further inflamed tensions between Kosovo and Serbia. Kosovo is a candidate to join the EU, but both the ECB and the European Commission have been against candidate countries adopting the EUR in advance of fulfilling the qualifying criteria to join the single currency. Technically the ECB could force Kosovo if it does join the EU to cease using the EUR, but in practice this is viewed as unlikely given that the ECB and the national banks were instrumental in the 2002 adoption of the currency. Meanwhile both the EU and the USA are sufficiently concerned by those tensions between Kosovo and Serbia to be devoting a lot of attention to calming the situation. The February 1st change in the usage of the Serbian Dinar has not helped that cause.
EUR/SRD 117.21.

US National Debt

In 2024 the USA will spend USD 870 billion on servicing its debt which is more than it will spend on defence. In the next decade the USA will spend USD 12.4 Trillion which is bigger than the amount of the total US government debt in 2009. Due to the interest rate spike the USA has seen the amount it spends on servicing its debt rise by 35% in each of the past 2 years. What all that adds up to is that the USA is spending more than it is producing.
EUR/JPY 162.125.


Much of the Korean Won currency market has been executed via Non Deliverable Forwards and settled as a contract for difference versus the Spot market. South Korea wants to attract more foreign investment and is trying to get currency investment to take place through the Spot market by extending the trading hours from July this year until 2am Seoul time to capture interest from the European markets. Also South Korea will allow some foreign institutions to participate in the local interbank market. What all that adds up to is more KRW liquidity and largely sleepless nights for Seoul based KRW traders.
USD/KRW 1,337.47.

9 to 5

It was this day in 1981 that diminutive US singer Dolly Parton had a Number One with this song. For those tempted to dismiss Dolly as a one hit wonder from Nashville Tennessee, the actuality of multiple record hits, packed out concerts and immense commercial success from her theme park Dollywood firmly scotched that one. The best line from Dolly Parton on her striking selection of outfits and improbable wigs remains, “It takes an awful lot of money to look this cheap.”

Tumble outta bed and I stumble to the kitchen
Pour myself a cup of ambition
And yawn and stretch and try to come to life

Jump in the shower and the blood starts pumpin’
Out on the street, the traffic starts jumpin’
The folks like me on the job from 9 to 5

Workin’ 9 to 5, what a way to make a livin’
Barely gettin’ by, it’s all takin’ and no givin’
They just use your mind
And they never give you credit
It’s enough to drive you crazy if you let it

9 to 5, for service and devotion
You would think that I
Would deserve a fair promotion
Want to move ahead
But the boss won’t seem to let me
I swear sometimes that man is out to get me

They let you dream just to watch ’em shatter
You’re just a step on the boss-man’s ladder
But you got dreams he’ll never take away

You’re in the same boat with a lot of your friends
Waitin’ for the day your ship’ll come in
And the tide’s gonna turn
And it’s all gonna roll your way…

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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