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 account manager on 020 7898 0541 to get started.
