Daily Brief – British Pound

British Pound

Even optimists on interest rate cuts have been wobbling over the weekend as to the likelihood of a UK interest rate cut in August from the current 5.25%. While it is still expected that rates will be down to 4.75% by year end, the rhetoric has moved to higher for longer. That means that GBP will continue strong and there is talk of a GBP/USD objective of 1.35. For the present, GBP remains below 1.29 but looks to be a currency to buy on dips.

GBP/USD 1.2865.

Cineworld

As part of a restructuring, Cineworld the world’s second largest cinema chain, has announced it is to close 6 cinemas right across the UK ranging from Glasgow, Parkhead to Bedford to Swindon. With 128 sites in the UK and Ireland as part of its worldwide footprint of 751 cinemas, Cineworld has GBP 4 billion of debt and has been in administration since July 2023. Before the pandemic Cineworld had sales of GBP 3.5 billion and going to the cinema was a thing. Audiences having become used to not going due to the risks of infection became used to not going at all investing in wide screen TVs and Sky packages. It remains to be seen whether Cineworld’s restructuring can salvage a viable business but in the UK an ominous announcement has also been made that the current Cineworld operations will continue until at least September which is now only weeks away.

EUR/GBP 0.8437.

EU Commission Budget Deficit Proceedings

Now all those annoying elections are out of the way the Commission has returned to pursuing those countries on the naughty step due to their national budgets exceeding the permitted 3% of GDP and the overall debt ceiling of 60% of GDP. Given a bye in the post Covid era to allow them to recover, the Commission is now back on the case with larger members France and Italy in the frame plus Belgium, Hungary, Poland, Malta and Slovakia. Romania is also under the cosh which has been the case since 2020 but it also was given leeway until now. While this is all painted as a further example of Brussels versus Italy and Greece, the reality is that it is prudent Northern Europe led in particular by Germany and the Netherlands tightening the screws on profligate Southern Europe.

EUR/USD1.0855.

Cost of Living

This weekend Tesco issued a helpful suggestion as to how to preserve ripe bananas for future eating: skin them and then freeze them either sliced or whole. Those of us of a certain vintage and still in possession of our marbles will recall the summer of 1976 which for the avoidance of doubt was a real summer-many weeks of hot weather- and one when just as gardens and parks were baked and rivers, lakes and reservoirs were at hitherto record low levels, the UK Labour Government of the day appointed Denis Howell as Minister of the Drought. Two things happened in quick succession: firstly advertisements were issued exhorting people to save water by bathing with a friend-that rated as exciting in 1976- and secondly, it started raining-continuously. Bananas.

EUR/JPY 166.93.

Black Dog

It was this day in 1973 that British rock band Led Zeppelin woke up in the Drake Hotel NYC to discover that the receipts from their previous 2 nights’ concerts at Madison Square Gardens amounting to $203,000 had been stolen from the hotel safe. Their manager was suspected but the culprit was never found. A bad start to the day but one that was merely a small bump in the road for Led Zeppelin although today that ticket money of USD 203,000 that went walkies would be worth USD 1,436,430.

Hey hey mama said the way you move
Gonna make you sweat, gonna make you groove

Ah, ah, child, way you shake that thing
Gonna make you burn, gonna make you sting.

Hey hey baby when you walk that way
Watch your honey drip, can’t keep away

Oh yeah, oh yeah, oh, ah, ah
Oh yeah, oh yeah, oh, ah, ah.

I gotta roll, can’t stand still
Got a flamin’ heart, can’t get my fill

Eyes that shine, burnin’ red
Dreams of you all through my head

Ah ah, ah ah, ah ah, ah ah, ah ah, ah ah, ahhh

Hey, baby, whoa baby, pretty baby
Darlin’ makes ’em do me now
Hey, baby, oh baby, pretty baby
Move me like you’re doin’ now

Didn’t take too long ‘fore I found out
What people mean by down and out

Spent my money, took my car
Started tellin’ her friends she gonna be a star

I don’t know, but I been told
A big-legged woman ain’t got no soul
Oh yeah, oh yeah, ah, ah, ah

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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