Daily Brief – British Pound

British Pound

GBP is currently in fashion: with a record number of long positions and currently at the top of the G7 currency performance charts and after a period of being deeply unfashionable GBP is wanted-in a good way. The reasons for this are diverse: first off is the Bank of England’s caution on cutting interest rates, then there is the post election bump when as the new government has at least 5 years in power the epithet of stable government has crept into the narrative and last but not least, there have been some tentative positive signs of the economy showing signs of picking up. Now French fund manager giant Amundi has weighed in and said that they see GBP rising further. In no way wanting to spoil the party it is worth reading the small print of Amundi’s forecasts which include EUR/GBP moving as far as GBP 0.82. Sterling veterans will smile wryly at this definition of being worthy of noting: 1.6% used to be the movement of a single morning or not that occasionally less than an hour.

EUR/GBP 0.8408.

Taiwan

A rule of thumb is that for each percentage point rise in inflation, there is a 7% rise in commodities.

It may seem far away and a remote possibility but Taiwan’s government is highly focused on the threat of a Chinese invasion. This week sees the annual civilian and military rehearsals for such an eventuality-the Han Kuang anti invasion exercises. In past years the accusation has been levelled that the exercises were more performative than real with actors playing the parts of invading Chinese forces. This year, there is none of that and many of the drills are deadly serious, unscripted and involve live fire.

USD/JPY 156.21. 

Human Resources

If you read the newspapers a very small number of years ago you would think that financial services in general and investment banking in particular was all to do with HR issues and less to do with making returns for clients and investors-not necessarily in that order. Now bullying, extra marital affairs, mansplaining, all varieties of discrimination, sexual harassment and bullying are the preserve of the BBC and especially its hit show Strictly Come Dancing. Cynics might suspect that the programme’s management has deliberately fed these lurid tales to breathe new life into the show which is now 21 years old and enjoys the title of being named not only the UK’s but the world’s most successful TV reality format show by the Guinness Book of Records-and that was in 2010. Stand by for more saucy stuff amidst the sequins underneath the glitter ball in 2024/2025.

GBP/USD 1.2917.

Mount Etna

Yesterday residents and visitors to Sicily were reminded that Mount Etna is very much an active volcano when loud roars were heard and smoke and ash spewed out of many of the more than 200 craters. Catania Airport was closed all day and flights were cancelled or diverted to Comiso or Palermo airports. Sicily is of course the largest of the Mediterranean islands and it takes at least four hours to drive from one end to the other or up to 8 hours to the extremes. Nevertheless seeing Etna erupt at night is unforgettable. To answer the unspoken question the last time lava flowed towards her towns and destroyed homes and whole villages was in the 1800’s but….

EUR/USD 1.0860.

Big Yellow Taxi

This day in 2022 Joni Mitchell aged 78 performed a full set at the Newport Rhode Island Folk Festival after serious illness that had left her unlikely to ever perform again. Performing in front of an enthusiastic crowd clearly suited her and she received deserved and long applause singing all her best known songs including this one from 1970:

They paved paradise, put up a parking lot
With a pink hotel, a boutique, and a swingin’ hot spot

Don’t it always seem to go
That you don’t know what you’ve got ’til it’s gone
They paved paradise, put up a parking lot
(Ooh, bop-bop-bop-bop, ooh, bop-bop-bop-bop)

They took all the trees put ’em in a tree museum
And they charged the people a dollar an’ a half just to see ’em

Don’t it always seem to go
That you don’t know what you’ve got ’til it’s gone
They paved paradise, put up a parking lot
(Ooh, bop-bop-bop-bop, ooh, bop-bop-bop-bop)

Hey farmer, farmer put away that DDT now
Give me spots on my apples, but leave me the birds and the bees
Please

Don’t it always seem to go
That you don’t know what you’ve got ’til it’s gone
They paved paradise, put up a parking lot
(Ooh, bop-bop-bop-bop, ooh, bop-bop-bop-bop)

Late last night I heard the screen door slam
And a big yellow taxi took away my old man

Don’t it always seem to go
That you don’t know what you’ve got ’til it’s gone
They paved paradise, put up a parking lot (ooh, bop-bop-bop-bop)

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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