Base Rate Instinct
20 September, 2019
What a bumper week it has been in the Soap Opera that has become Brexit.
We had Boris Johnson meeting with Xavier Bettell to discuss a way forward, only for Boris to suddenly ‘worry about his safety’ because of very loud ‘shouty’ protesters. So instead of an open-air press conference where the two gentlemen could share the fruits of their discussions with the press and anyone else sitting on the edge of their seat, we were treated to Xavier taking the opportunity to lambast Boris for his impression of a lecturn.
Whilst in court….yes court, we have seen Gina Millers’ latest attempt to scupper the Brexit Train (or Donkey and Cart) by bringing a court action against Boris’ move to prorogue (suspend) parliament. The case is centred on the charge that it was illegal and also that the proroguing was brought about by misleading the queen with its’ real purpose being to keep the MP’s out of The Houses of Parliament and run down the Brexit clock. Thereby forcing a ‘no-deal Brexit’ scenario, as Boris always promised.
We saw The Labour Party and the Liberal Democrats have their Party Conferences this week. With both leaders somewhat singing from the same hymn sheet and being as clear as Cocoa on what they would do regarding Brexit if they got into power.
I say this because apart from Jo Swinson reminding us all that ‘ being a woman is not a weakness’ (if it is, it has spread to a lot of Men), Jo insisted that her party would revoke article 50 and cancel Brexit altogether.
Then you have Jeremy Corbyn attacking the Student Wing of his own party. They both said (one perhaps louder than the other) that they would not have a Brexit or at the most (in Jeremy’s case) they would have a second referendum or a referendum on whether they should have a second referendum. You see, clear as Cocoa.
However, problems arose for both of them after the applause stopped and individuals from both parties were asked to confirm their stance, which is where could start to see the cracks appear.
The major fault for both The Labour Party and the Liberal Democrat leaders is simple. The Lib Dems’ have taken a considerable amount of seats in recent elections (thanks mostly to Mrs May…remember her?) and the case could be argued that they are growing into a major political force again.
Slight issue there is, we still have the image of Clegg (remember him?) running around to both Labour and Conservative party HQ’s (as though he was looking for a date) to form a Coalition Government and boy did he choose badly and forced to go back on his word of cancelling student fees and that was just for starters.
Labours’ issues are the same as always……..Jeremy Corbyn.
So where has all of this ‘drama’ left poor old sterling? Well to be honest, not in too bad a shape.
Every slap in the face for Boris, be it from colleagues (or family) leaving, on-going court cases, being made a mockery overseas (or daily life as Boris calls it), is a step further away from a ‘no-deal Brexit’ and Sterling likes that idea very much.
However, every time President Trump reminds us of how great he and Boris are and how much they are alike (compliment???), with the wonderful trade deals that we can look forward to. Or when Boris’ team speak positively about ‘no deal’ or the knowledge that Parliament could still remain suspended, even if the prorogation case verdict goes against Boris, then Sterling tends to feel a little less encouraged.
Speaking of our American Cousins, President Trump has been doing his best ‘Top Gun’ impression by warning Iran that ‘we are locked and loaded’ after a drone attack on a Saudi oil field, which cut back almost 7% of the world’s reserves. If that had taken place in the 1960s, (drone technology withstanding) that would have been almost 80%
The U.S Federal Reserve also cut interest rates for only the second time since 2008, amid growing concerns over President Trumps Global trade war.
U.S policymakers were said to be ‘divided’ over this move but in the end, they lowered to almost 25 base points, to between 1.75 – 2%
Amazingly, President Trump was on Twitter immediately to criticise the move, stating that Jay (Jerome) Powell and his team ‘failed again’ and ‘had no guts, sense or vision’. No surprise as this was the same President that sacked John Bolton (National Security Adviser) by Tweet this week. Another of an ever-growing list of sackings and regrets.
With regards to the English financial data releases for today, we have the Bank of England Quarterly Bulletin at midday.
This is where the Banks’ Monetary Policy Committee (MPC) take a look at our spending habits (amongst other things) and the strength or growth pattern of the economy and decide whether to hold the Bank rate or perhaps increase it.
During the MPC’s September meeting they agreed to hold the BoE rate at 0.75% but this was under the assumption of a somewhat smoother Brexit and signs of recovery in global economic growth. So it will be interesting to see what is decided.
So where do you stand in all of this? what do you do if you want to buy foreign currency? Perhaps you want to repatriate your currency back to Sterling, what do you look out for?
To ensure the best rate every time and to use exchange mechanism’s to help eliminate the risk involved, all you need to do is pick up the phone, call and speak with your dedicated Foreign Currency Consultant.
At Currency Index, we make a point of watching, understanding and studying the ‘financial pitfalls’ and traps, so you don’t have to fall in.
- Market Report Extension or no deal? 23 October, 2019
- Johnson continues to battle with MPs to get Brexit over the line 21 October, 2019
- We have a deal or do we? 18 October, 2019
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