Sterling set to strengthen

A string of stronger than expected data.

The sterling seems set to strengthen. At least against the Euro. That is the message that macro-economic fundamentals are giving us right now: robust Retail Sales figures, higher than expected core inflation, and rapidly reviving housing markets, the latest in a string of stronger than expected data.

There now seems little prospect that the new Bank of England Governor, Mark Carney, will preside over any more quantitative easing or cuts in base rates after he takes the helm in July. Indeed the sterling interest rate futures markets have already started to anticipate rises in rates, with the first 0.5 per cent hike now expected as early as the end of next year.

Short-term interest rates can be an important determinant of exchange rates; especially when the differential between the two rates involved changes rapidly, and one finds it hard to envisage a rise in Euro rates any time soon. Indeed, we are lead to believe that debate continues to rage within the European Central Bank as to whether they should take their deposit rate into negative territory.

I personally do not expect that to happen, principally because of the "locomotive effect" from an American recovery which is gathering pace by the day. The UK also stands to benefit from this effect, but much more so given the absence of the idiosyncratic challenges which face the Eurozone, in the shape of extreme imbalances between regions, ongoing steroidal austerity and the ever present threat of violent social unrest this summer as tragic levels of unemployment drive voters onto the streets.

The UK’s flexible labour market also places us in a much better position to expand. The foreign exchange markets have a knack of moving very rapidly to discount these sorts of changes in prospect for both the economy and interest rates.

If this move in sterling went too far, however, the new Governor may start protesting. He may well see the tightening in monetary conditions that this would imply, as too much, too early for a still nascent recover. However, the foreign exchange markets can move a long way, and very quickly, before he settles into his seat next month.

Bank of England Governor, Mark Carney. Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

Photo: Getty
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The Tories play Game of Thrones while the White Walkers from Brussels advance

The whole premise of the show is a pretty good metaphor for the current state of British politics.

If you’re a fan of asking “who’s that, then?” and “is that the one who killed the other one’s brother?”, I bring great news. Game of Thrones is back for a seventh series. Its vast assortment of characters was hard enough to keep track of before half of them got makeovers. But now the new Queen Cersei has reacted to the arrival of the long winter by investing heavily in the kind of leather ball gowns sold by goth shops in Camden, and Euron Greyjoy, once a fairly bland sailor, has come back as a Halloween costume version of Pacey from Dawson’s Creek, all eyeliner and epaulettes.

The show’s reliance on British character actors is the only thing keeping me vaguely on top of the cast list: what’s Diana Rigg up to these days in Highgarden? And what about that guy who was in Downton Abbey that time, who now has the scaly arms? (Luckily, the next thing I watched after the Game of Thrones series premiere was the first two episodes of the revived Twin Peaks, which put my confusion into perspective. There, Agent Cooper spent most of his time talking to a pulsating bladder attached to one of those fake trees you get from Ikea when your landlord won’t let you have real plants.)

The day-to-day business of Game of Thrones has always been power – answering the question of who will sit on the Iron Throne, forged by Aegon the Conqueror from the swords of his defeated enemies. But its backdrop is a far bigger threat: the arrival of a winter that will last many years, and the invasion of an army of the undead.

That might seem like an unkind way to think about Michel Barnier and his fellow Brexit negotiators – inexorably marching towards us, briefing papers in hand, while Liam Fox frantically rings a bell at the entrance to the Channel Tunnel – but nonetheless, the whole premise of Game of Thrones is a pretty good metaphor for the current state of British politics.

The current internal Conservative struggle for power might be vicious but it is at least familiar to its contestants; they know which weapons to deploy, which alliances are vital, who owes them a favour. Meanwhile, the true challenge facing every one of them is too frightening to contemplate.

In 2013, this magazine celebrated the early success of the show with a cover depicting one of our terrifying painted mash-ups: “The Tory Game of Thrones.” Our casting has been strangely vindicated. George Osborne was our Jaime Lannister – once the kind of uncomplicated bastard who would push a child out of a window but now largely the purveyor of waspish remarks about other, worse characters. Our Cersei was Theresa May, who spent the early seasons of The Cameron Era in a highly visible but underwritten role. Now, she has just seized power, only to discover herself beset by enemies on all sides. (Plus, Jeremy Corbyn as the High Sparrow would quite like her to walk penitently through the streets while onlookers cry “shame!”)

Michael Gove was our Tyrion Lannister, the kind of man who would shoot his own father while the guy was on the loo (or run a rival’s leadership campaign only to detonate it at the last minute). Jeremy Hunt was Jon Snow, slain by the brotherhood of the Night Shift at A&E, only in this case still waiting for resurrection.

The comparison falls down a bit at Boris Johnson as Daenerys Targaryen, as the former London mayor has not, to my knowledge, ever married a horse lord or hired an army of eunuchs, but it feels like the kind of thing he might do.

We didn’t have David Davis on there – hated by the old king, David Camareon, he was at the time banished to the back benches. Let’s retrospectively appoint him Euron Greyjoy, making a suspiciously seductive offer to Queen Cersei. (Philip Hammond is Gendry, in that most of the country can’t remember who he is but feel he might turn out to be important later.)

That lengthy list shows how Conservative infighting suffers from the same problem that the Game of Thrones screenwriters wrestle with: there are so many characters, and moving the pieces round the board takes up so much time and energy, that we’re in danger of forgetting why it matters who wins. In the books, there is more space to expound on the politics. George R R Martin once said that he came away from The Lord of The Rings asking: “What was Aragorn’s tax policy?” (The author added: “And what about all these orcs? By the end of the war, Sauron is gone but all of the orcs aren’t gone – they’re in the mountains. Did Aragorn pursue a policy of systematic genocide and kill them? Even the little baby orcs, in their little orc cradles?”)

Martin’s fantasy vision also feels relevant to the Tories because its power struggles aren’t about an “endless series of dark lords and their evil minions who are all very ugly and wear black clothes”. Instead, everyone is flawed. In Westeros, as in the Conservative Party, it can be difficult to decide who you want to triumph. Sure, Daenerys might seem enlightened, but she watched her brother have molten gold poured down his throat; plucky Arya Stark might tip over from adorable assassin into full-blown psychopath. Similarly, it’s hard to get worked up about the accusation that Philip Hammond said that driving a train was so easy “even a woman” could do it, when David Davis marked his last leadership campaign by posing alongside women in tight T-shirts reading “It’s DD for me”.

The only big difference from the show is that in real life I have sympathy for Barnier and the White Walkers of Brussels. Still, maybe it will turn out that the undead of Game of Thrones are tired of the Seven Kingdoms throwing their weight around and are only marching south to demand money before negotiating a trade deal? That’s the kind of plot twist we’re all waiting for.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 20 July 2017 issue of the New Statesman, The new world disorder