Morning Brief – British Pound

Humphrey Percy
Chairman and Founder
Mon 3 Jun 2024

British Pound

As the main global economies reported on inflation last week, analysts are drawing some high level conclusions: inflation remains stubborn which reduces the probability of the number of rate cuts this year expected three months ago. Consumer sentiment remains strong in the USA. Europe has declared that it is not constrained by other economies and will cut rates-the elections in 5 days time doubtless a coincidence(!). In the midst of all that, GBP remains strong but with only 31 days until its own General Election, it will be prone to more movement than has been seen for some time not least because favourites to win, Labour have not broken cover on their plans when they gain power.

GBP/EUR 1.1655.

Drinks Companies

With shares in global drinks giants Diageo, Pernod Ricard, Remy Cointreau and Campari all down between 20-40% and trading on a 10 year low, the question is why. The answer is in part stocking problems in Latin America due to supply chain issues, plus the threat of China imposing a tax on imported Brandy and lastly a decline of over 3% in spirits consumption in the USA. If one subscribes to the idea that the market is set for a post Covid normalised return to alcohol consumption, the shares look oversold especially for those companies that do not have too many aging stocks such as Campari.

EUR/USD 1.0850

Digital Nomads

Following the pioneering work gig economy and then Covid, the concept of working literally anywhere in the world remote to one’s workplace is now firmly established. There is now even an index that measures 9 different criteria ranging from ease of obtaining work visas, cost of rent and the number of workstations to speed of the local internet. And the most attractive place in the world by some distance is Hoi An which is an attractive coastal village in Vietnam. Digital nomads locating there will need to manage their currency exposure to the Dong carefully and be adept with a calculator.

USD/VND 25450.

Pussy Galore

Not a reference to the James Bond film Goldfinger, but to England’s cat population. Here are the numbers and why it matters: in just one week a new law comes in that requires all cats to be microchipped before they are 20 weeks old-but only in England . There are 9 million cats in England and 2.3 million are not chipped. This could be an answer to the black hole of the UK’s finances as after a warning, non compliance will be followed by a £500 fine. At a cost of approximately £20 to chip a cat, vets should expect to be busy as the new law takes a grip on England’s cats. Welsh, Scots and Northern Irish cats remain exempt.Miaow.

GBP/USD 1.2740.

I Want Your Sex

This day in 1987 the BBC ensured rocketing sales, endless popularity and lots of royalties for George Michael by banning this number due to its sexual content. GM hit back saying that the song was to do with love not sex. You can make your mind up for yourself; here it is:

There’s things that you guess
And things that you know
There’s boys you can trust
And girls that you don’t
There’s little things you hide
And little things that you show
Sometimes you think you’re gonna get it
But you don’t and that’s just the way it goes

I swear I won’t tease you
Won’t tell you no lies
I don’t need no bible
Just look in my eyes
I’ve waited so long baby
Now that we’re friends
Every man’s got his patience
And here’s where mine ends

I want your sex
I want your love
I want your sex
I want your, sex

It’s playing on my mind
It’s dancing on my soul
It’s taken so much time
So why don’t you just let me go
I’d really like to try
Oh I’d really love to know
When you tell me you’re gonna regret it
Then I tell you that I love you but you still say no!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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