By Matthew Vassallo
It was a busy day on the markets yesterday, with the Pound once again being pulled from pillar to post.
Following a sharp downturn over recent days against a host of the major currencies, for a time during early trading on Thursday, it seemed as though this negative trend was set to continue. Sterling touched close to a 5-year low against the US Dollar and fell to levels against the Euro that we’ve not seen since the initial aftermath of Brexit.
Much of the media’s focus yesterday centred on number 10 Downing Street, following the resignation of PM Boris Johnson’s ethics advisor Lord Geidt. As reports filtered out regarding the content of Lord Geidt’s resignation letter, it became clear that the PM was being dragged into yet another political scandal. The letter has been printed in full and is available via the BBC website. However, the most damning comments made were in relation to specific requests made by Boris Johnson, which Lord Geidt believed would amount to a deliberate breach of the minister’s code.
Whilst we try to avoid elongated quotes in our daily reports, the following quotes made by Lord Geidt are a grim synopsis of the litany of complaints currently stacking up against the PM.
“This request has placed me in an impossible and odious position,” He went on to say that the PM’s comments that he “might to any degree be in the business of deliberately breaching his own code is an affront” that would suspend the code “to suit a political end”. “This would make a mockery not only of respect for the code but licence the suspension of its provisions in governing the conduct of Her Majesty’s ministers,” Lord Geidt summised “I can have no part in this.”
It would be fair to assume that any other political leaders may accept their time in office was done, but as we’ve been reminded of on multiple occasions in recent months, Boris is not one for self-critique let alone self-expulsion.
Moving on, and the BoE voted 6-3 in favour a 0.25% rate hike and whilst there was a partial expectation from investors that the central bank would raise rates by 0.5%, the subsequent minutes gave a key insight into their forward thinking. As such, the pound was buoyed by strong indications give by the BoE committee that the rate hikes were likely to continue for the foreseeable future and may even gather further pace in the coming months.
Sterling’s rebound was almost as sharp as its decline, as regained almost 3 cents against the USD, whilst it was trading two cents Day higher against the Euro by close of trading than it was at opening bell.