Daily Mail

Trump’s gift for ster­ling

- Alex Brum­mer CITY EDI­TOR Foreign Exchange Market · Currencies · Finance · UK News · Brexit · Financial Markets · Business · British Politics · European Politics · Politics · Donald Trump · United States of America · Federal Reserve System · White House · United Kingdom · Diageo · Unilever NV · The Financial Times Share Index · European Union · Julian Dunkerton · Superdry · Ted Baker · City of London · London · Beckford · Bank of England · England · Diageo · City of London Corporation · John Soane · John Soane

AS travel to the US is vir­tu­ally non- ex­is­tent at present, the re­cent surge of the pound against the dol­lar barely has been no­ticed. Slowly but surely, at $1.34 in lat­est trad­ing, it is creep­ing back to lev­els not seen since be­fore the Brexit ref­er­en­dum.

The dol­lar has a his­tory of weak­en­ing ahead of US pres­i­den­tial elec­tions be­cause of un­cer­tainty.

Po­lit­i­cal risk looks high for the dol­lar at present as a re­sult of racial di­vi­sions ex­posed by Black Lives Mat­ter, the pan­demic and the Fed­eral Re­serve’s new pol­icy of av­er­age-in­fla­tion tar­get­ing. This is in­ter­preted as giv­ing the green light to low rates as far as the eye can see.

The pound strength­ened in the run-up and af­ter­math of the 2016 pres­i­den­tial elec­tion, which brought Don­ald Trump to the White House. The pat­tern shows signs of re­peat­ing it­self as we move to­wards Tues­day, Novem­ber 3. The prospect of low in­ter­est rates for a lengthy pe­riod also means that fund man­agers are look­ing to Asia in search of bet­ter re­turns.

The ster­ling-dol­lar ex­change rate is hugely im­por­tant to the UK. The US is Bri­tain’s big­gest sin­gle trad­ing part­ner and many of the UK’s largest firms in­clud­ing big pharma, the spir­its gi­ant Di­a­geo and Unilever have large ex­po­sures to Amer­ica. The ex­change rate im­pacts on their ster­ling in­come. So what is good for the ster­ling is not good for the FTSE 100 which is pow­ered largely by global gi­ants with dol­lar earn­ings.

The other fac­tor weigh­ing on the pound is Brexit. The ex­change rate tum­bled from a peak of $1.5018 just after the ref­er­en­dum on June 23 2016 to $1.1404 in March this year as the coun­try went into lock­down and prospects of a Brexit deal re­treated.

Pre­dict­ing a path for the pound, with an EU trade deal un­set­tled, is tricky. Nev­er­the­less, the prospect of a stale­mate or dis­puted Amer­i­can elec­tion out­come would def­i­nitely tip the scales in the pound’s favour. Ster­ling’s value also could be un­der­pinned by a ro­bust bounce back from the dis­as­trous 20.4pc de­cline in out­put in the second quar­ter. Man­u­fac­tur­ing is on the right path. Help for the hous­ing mar­ket in the shape of the stamp duty hol­i­day for homes sell­ing for un­der £500,000 is boost­ing sales and mort­gage ap­provals.

The pound is still seen by many as a source of na­tional pride. There were fears ear­lier this year that it could be head­ing to dol­lar par­ity. That has been avoided. The revival is some­thing to be cheer­ful about.

Cruise con­trol

COME­BACK kids are all the rage. Ju­lian Dunker­ton has re­turned to Su­perdry, the door has been re­opened for Ray Kelvin at Ted Baker and Sir Roger De Haan is go­ing one bet­ter by re­cy­cling as much as £100m of cash into sil­ver plated travel and in­sur­ance out­fit Saga.

Both Saga and its erst­while side­kick the AA are short of cash and in play amid Covid19. The pri­vate eq­uity ef­fort to turn Sa­gaAA into an in­sur­ance and fi­nan­cial ser­vices cham­pion proved a dis­mal fail­ure and the re­turn of both com­pa­nies to the pub­licly quoted mar­kets has been lit­tle short of a dis­as­ter.

Any­one who thinks that pri­vate eq­uity own­er­ship is a good op­tion need only look at the build-up of a £600m debt pile at Saga to un­der­stand it’s not. Chief- ex­ec­u­tive Euan Suther­land seems to be do­ing the right things. Su­per­flu­ous en­ter­prises have been sold off and the in­ten­tion is to fo­cus on travel, cruise and in­sur­ance.

one of the big­gest tasks is get­ting cruise ships up and run­ning by Christ­mas. Book­ings for 2021 are strong and the lat­est two ves­sels have safer cabin ex­clu­sive air con­di­tion­ing. That should help as should the fo­cus of the in­sur­ance arm on pro­vid­ing pan­demic cover. In­vestors seem im­pressed mark­ing the shares up 32pc.

Far bet­ter De Haan than an­other pe­riod in grasp­ing and dis­mal pri­vate eq­uity own­er­ship.

Eras­ing his­tory

THE wealth of the Square Mile was built on em­pire. The City of Lon­don Cor­po­ra­tion has de­cided the time has come to con­front that past with a three month re­view on what to do about stat­ues with his­toric links to slav­ery and racism.

Among the mon­u­ments in dan­ger is a statue of Wil­liam Beck­ford in the Guild­hall, a for­mer Lord Mayor re­puted to be the largest slave owner of his time

Who knows what hor­rors lurks be­hind Sir John Soane’s cur­tain wall at the Bank of Eng­land.

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