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It was a return to negative headlines about the PM yesterday, as May elections loom (Steve Travelguide / Shutterstock.com)
The continued ceasefire between the US and Iran – and the first talks between Israel and Lebanon for decades – have helped to calm market nerves in the past week. However the problem over oil supplies continues, with dire warnings over jet fuel ahead of the spring and summer holiday period – and even over beer supplies ahead of the World Cup, as CO2 production is threatened.
Bitter and cider, England fans will be glad to know, require considerably less carbonation than lager, but the threat remains over inflation. British farmers warned yesterday about rising costs, with fertiliser prices jumping by 30%. Overall, agricultural inflation (‘agflation’) hit 7.6% in March and this is bound to be passed on to consumers.
The Bank of England governor Andrew Bailey spoke yesterday about that, but offered a reassuring note, that the Bank would not be rushing into interest rate rises. It’s not entirely up to him, as the nine-person Monetary Policy Committee makes those decisions, but he was supported even by uber-hawk MPC-member Megan Greene, who said that markets were right to keep rate rise expectations low. Having been widely accused of being too slow to respond to the last crisis in 2022, you may wonder how much of your hard-earned money to trust to that.
A potential threat to the pound has arisen from the long-running Peter Mandelson drama, and doubts about the prime minister’s account of his appointment as US ambassador despite failing security vetting. The threat is more about the press and PM’s enemies within his own party using it as an excuse to remove him. You may remember that Boris Johnson was finally ousted as PM over a similar scandal appointing an overly handsy MP called Pincher as Deputy Chief Whip. Over the three months following Johnson’s resignation the pound suffered one of its worse periods of turbulence in years, gaining and losing around 8% against the euro and hitting a 40-year low against USD.
This could all blow over, but there are plenty of threats to keep anyone with a major overseas transaction awake at night, unless they choose a pro-active approach and speak to their account manager about mitigating risks. For now, the pound remains close to a four-year high against the dollar and right on the post-Brexit average against EUR.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
GBP: Sterling slips back
It was all downhill for sterling yesterday as the gains in the early part of the week were finally wiped out against the euro. Still, the pound remains 0.75% up on the US dollar compared to Monday. The cause of sterling’s demise yesterday was the BoE’s Andrew Bailey saying they would not be rushing into interest rate rises. However, that suggests that data will be the guide once again, and we have a lot of it coming out next week, starting with unemployment on Tuesday, then inflation on Wednesday and PMI on Thursday.
GBP/USD past year
EUR: Euro stays on top of dollar
Gains on the pound were among the few bright spots for the euro yesterday, but it remains strong against the US dollar, close to a six-week high and not far off its best for five years. Will that be supported by upcoming data? There won’t be a lot of that about next week, with Tuesday’s ZEW Economic Sentiment Index and Thursday’s PMI readings the high points.
GBP/EUR past year
USD: Dollar reverses direction
There was a sharp turn around in the dollar’s fortunes yesterday. In the current risk sensitive climate that isn’t necessarily good news for the rest of us, but this time around looks to be a positive indication of hopes on renewed peace talks in the Middle East, together with fewer than expected initial jobless claims. Up next week – retail sales and PMI.
USD/GBP past year
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