GBP
While the Bank of England’s decision to pause on raising rates by the narrowest of margins with voting 5-4, that resulted in GBP being sold sharply which reflects the market’s view that while inflation at 6.7% looked better than expected yesterday, the effect of higher oil prices and petrol and diesel at the pumps going up will counteract that. The vote on leaving rates unchanged will pile even more pressure on Governor Bailey to get the interest rate management decisions right as it is he who has the casting vote.
GBP/EUR 1.2270.
EUR Interest Rates
With the President of Germany’s Bundesbank stating bluntly that EU inflation is not coming down as desired, the likelihood of the ECB taking a more robust view on raising rates than its colleagues in the UK has increased. It is too early to say that EUR rates have topped out said Joachim Nagel yesterday. Not difficult to decipher that message.
EUR/USD 1.0640.
Metsa Tissue
Some positivity for UK plc with the news yesterday that Metsa Tissue, the Finnish toilet paper company is building a new paper mill in the Humber River estuary thereby creating 400 jobs in an investment worth several hundred million pounds. Without yanking their chains, this inward investment from Metsa after months of being closeted with Metsa Tissue management, has doubtless flushed the Humber’s civic leaders with success rather than driving them round the bend. Let’s hope it pans out.
GBP/USD 1.2275.
Farm Aid
The first Farm Aid concert took place this day in 1985 with a galaxy of stars to support the American family farmer which has since become an annual event. The first concert raised USD 7 million and attracted 80,000 fans (think 25% of the numbers at the 1969 Woodstock) and featured Bob Dylan, BB King, Tom Petty, Neil Young, Billy Joel, John Mellenkamp and Roy Orbison among others. Here is one from Neil Young: Don’t let it Bring You Down:
Old man lying by the side of the road
With the lorries rolling by
Blue moon sinking from the weight of the load
And the buildings scrape the sky
Cold wind ripping down the alley at dawn
And the morning paper flies
Dead man lying by the side of the road
With the daylight in his eyes
… Don’t let it bring you down
It’s only castles burning
Find someone who’s turning
And you will come around
… Blind man running through the light of the night
With an answer in his hand
Come on down to the river of sight
And you can really understand
Red lights flashing through the window in the rain
Can you hear the sirens moan?
White cane lying in a gutter in the lane
If you’re walking home alone
… Don’t let it bring you down
It’s only castles burning
Find someone who’s turning
And you will come around
Discussion and Analysis by Humphrey Percy, Chairman and Founder
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