Beyond Currency

"Sunak has been left holding the baby, when it comes to explaining just what the Government’s priorities will be, when and where they will start and most importantly how they will be funded. So now, Sunak who is wrestling with saving jobs, paying for continued support for those who are affected by the lockdown is now spokesman for the Government’s flagship project to return the country to growth.

He is probably entitled to ask just where his remit begins and ends and probably for a pay rise too!"

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The initial boost to activity as the economy began to open up has proved something of a false dawn as the true picture of job losses begins to emerge.

So far this week more than 12k jobs have been lost, mostly among large high street employers and some major retailers like John Lewis confirmed yesterday that some of their stores, that are prominent on several High Streets, won’t reopen.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"Boris Johnson channelled his inner Roosevelt yesterday as he announced a New Deal for the country which will see the playing field levelled as far as possible.

Having already invoked thoughts of Lady Thatcher and Sir Winston Churchill, Johnson looked across the Atlantic to find a way to galvanize the country to follow his lead in backing large infrastructure projects. He is planning to launch a New Deal that will evoke the ideas of the U.S. recovery from the great depression which was the last time the world found itself so close to the edge in peacetime."

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"Johnson has said he is expecting the UK to adopt an Australian style Brexit. To which the EU Commission President replied but we deal with Australia under WTO rules. I imagine Johnson’s reply was exactly.

Despite the posturing, negotiations resumed yesterday and there is sure to be some progress made. As Angela Merkle said in a number of newspaper interviews, if there is no deal done, the UK will have to live with the consequences. More posturing? No, that is a hard fact.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"Contrasting information, dataflows, opinion, and analysis are combining to provide a chequered picture for Sterling that has developed over the past month or so. It will continue until there is an announcement over the future arrangements between the UK and EU as well as a degree of certainty over the likelihood of a second wave of Coronavirus.

The deadline for the UK to request an extension to the December 31st deadline for it to leave the EU expires tomorrow and it is virtually certain that nothing more will happen in that direction.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The reduction on the rate of VAT almost across the board is the perfect instrument.

It is a headline catcher that will be seen by consumers when studying prices, it will be immediate from one day to the next and it can be used to attract footfall into shops. An additional benefit is that it can be used to differentiate between online shopping and a visit to the High Street.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The data for activity in both the manufacturing and services sectors, released yesterday, points to the UK seeing a U-shaped recovery from the effects of Codvid-19.

The hospitality sector of the economy is going to be allowed to reopen but this will be subject to strict social distancing restrictions. The two most significant requirements for the reopening of pubs and bars is that customers must provide their identity to enable contract tracing and they must only be served at their tables. This will ensure that the new one metre social distancing requirement can be maintained.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The Prime Minister is expected to announce two major lockdown events later today which will see the UK back on the path to normality. Buoyed by the lowest number for fatalities and new cases since lockdown began, Boris Johnson is set to announce the reduction of the social distancing measure from two metres to one.

Rishi Sunak, the Chancellor is apparently putting the final touches to an announcement that VAT will be cut from 20% to 10% on several products. This will be the first cut in VAT since Labour introduced different rates for petrol and luxury items in 1974.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"Rishi Sunak the Chancellor of the Exchequer is considering ways in which to boost consumer spending in the short term. He is also studying how he can replenish the nation's coffers after data last week which revealed that public sector net borrowing ballooned to £55 billion in May.

VAT receipts are one of the major earners for the country producing £138 billion in income last year. Sunak is considering reducing the sales tax on several items to encourage spending but in doing that as a short term fix, he may need to consider a rise in personal taxation later in the year in order to balance the books, or at least make a move in that direction."

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"There is a degree of expectation growing that although the contraction in the UK's Q2 GDP will be severe, it may not be as bad as had been predicted. That means a contraction of nearer 20% rather than closer to 40%.

With that in mind, the Bank of England pumped a further £100 billion into its QE programme at its Monetary Policy Committee meeting yesterday to add a level of security to the economy. The Bank did agree to slow the pace at which it hoovers up Government bond issuance. This will require private investors to take up the slack. This is a move which shows a degree of confidence in economic activity."

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.