Pound steadies as markets expect Bank of England action to prop up UK currency

Published

2 years ago

September 27, 2022

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The collapse of the value of the pound in the wake of Friday’s mini-budget appears to have stalled, for now, but only thanks to market expectations that the Bank of England will still be forced to intervene.

The rout for sterling, which began after Chancellor Kwasi Kwarteng revealed a £45bn tax cut plan on top of government aid for energy bills, was a consequence of concern over the levels of borrowing required.

It essentially called in to question the confidence the market had for sustainable public finances in the UK, also pushing up the rates demanded by investors to hold UK bonds – government IOUs – which will be used to fund the growth plan.

The pound hit an all-time low versus the dollar of $1.03 early on Monday but it later recovered some lost ground and had settled around $1.08 on Tuesday.

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There were three main factors behind the limited fightback.

One was a statement from the Treasury on Monday aimed at soothing nerves around Friday’s giveaways.

It revealed that Mr Kwarteng was to set out a “medium-term fiscal plan” on 23 November which would also contain independent analysis from the Office for Budget Responsibility – a check that was lacking in the mini-budget.

The second was due to a statement from the Bank of England which affirmed it would “not hesitate” to raise interest rates to prop up the value of sterling but added that it would make a full assessment at its next scheduled meeting.

The final facet can be traced across the Atlantic where the dollar – the world’s reserve currency which has strengthened significantly this year amid the economic turmoil linked to Russia’s war in Ukraine – fell back against a basket of international currencies.

Analysts cited renewed investor interest in stocks but remained cautious about the outlook as markets, already jittery at the prospect of US interest rates staying higher for longer, have been further unnerved by the upheaval for the pound and UK bond yields.

There was some relief for the government when the Treasury successfully raised £1.2bn through a bond sale on Tuesday morning.

The amount was covered 2.3 times, which Sky’s economics and data editor Ed Conway said showed there was “no shortage of appetite” for the debt.

The market volatility has been blamed for a number of mortgage providers withdrawing products from sale.

Such moves are expected to be only temporary amid the turmoil of the past few days.

Many market participants talked about a long road back to recovery for sterling because credibility had been lost.

Allan Monks, an economist at America’s largest bank JP Morgan, said the statements from the Bank and Treasury had been “measured”.

“But there is still no clear sign that the source of the problem – the government’s fiscal strategy – is being reversed or reconsidered,” he complained.

“This will need to happen before November in order to avoid a much worse outcome for the economy.”

Larry Summers, a former US Treasury Secretary, also spoke about credibility being lost and suggested that the crisis would affect London’s viability as a global financial centre.

Seema Shah, chief strategist at Principal Global Investors which manages around $500bn in assets, told the Reuters news agency: “Once a market starts to move with this kind of momentum, it’s hard to put a number on where it (sterling) will trough.

“But as an investor you take a long-term view. If you look at the UK as somewhere to invest over five years, for me that’s a no.”

Others said another factor behind sterling’s performance since Monday afternoon was that money leaving UK bonds was finding its way to the currency instead – but only because of the higher rate hike expectations.

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Victoria Scholar, head of investment at Interactive Investor, said markets were pricing in an emergency rate hike with 175 basis points’ (1.75%) worth of increases by November.

“The slump in sterling could exacerbate the UK’s inflation problem, with price levels currently flirting with double digits.

“More expensive imports may add to the UK’s upward price pressures, which is likely to prompt more aggressive action from central bank policy makers.”

UK

Three men arrested on suspicion of terrorism offences

Published

30 mins ago

May 8, 2024

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Three men arrested on suspicion of terrorism offences

Three men have been arrested on suspicion of terrorism offences.

The men have been taken into custody in northern England on suspicion of “commission, preparation and instigation of acts of terrorism”.

Greater Manchester Police said that at about 7.30pm, four warrants were executed in the Bolton, Great Lever, Abram and Hindley areas.

The men, aged 35, 36 and 51, were arrested at separate locations and have been taken into custody for questioning.

Scenes remain in place at the four addresses as inquiries are carried out, the force said, while warning the local community they may see an increased police presence in the coming days.

Assistant Chief Constable Rob Potts, who holds responsibility for counter terrorism policing in the north west, said: “This evening we have executed a number of planned warrants as part of an ongoing counter terrorism investigation.

“Three men have been taken into custody for questioning and scenes remain in place as we conduct further enquiries.

“Today’s activity has been the culmination of much detailed planning and we have put measures in place to minimise disruption to local residents as much as possible.”

He added: “I want to reassure members of the public that we do not currently believe there to be any wider threat linked to today’s activity.”

UK

Auriol Grey: Woman who caused cyclist to fall into path of car has manslaughter conviction overturned

Published

30 mins ago

May 8, 2024

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Auriol Grey: Woman who caused cyclist to fall into path of car has manslaughter conviction overturned

A woman who shouted and waved aggressively at a cyclist on the pavement, causing her to fall into the path of a car, has had her conviction for manslaughter overturned and walked free from court.

CCTV showed Auriol Grey shout “get off the f****** pavement” as Celia Ward approached her in Huntingdon, Cambridgeshire, in October 2020.

The 77-year-old then veered off the 2.4m-wide path into the road.

Mrs Ward, a grandmother, died after she was struck by a car.

Grey, who has cerebral palsy and was described by her lawyer as “partially blind”, was given a three-year jail sentence in March 2023 after being convicted of manslaughter.

But the Court of Appeal ruled today that the manslaughter conviction should be overturned and she walked free from court.

Dame Victoria Sharp, sitting with Mrs Justice Yip and Mrs Justice Farbey, said: “In our judgment, the prosecution case was insufficient even to be left to the jury.”

She added: “In all the circumstances, we have no hesitation in concluding that the appellant’s conviction for manslaughter is unsafe.”

Following the ruling, Grey’s family said: “Whilst we welcome the decision of the Court of Appeal our thoughts today are also with the Ward family and I am sure a day doesn’t go by when they don’t remember their tragic loss.

“There has been unnecessary and prolonged suffering and vulnerable people like Auriol need better support from the justice system – we hope lessons will be learnt.

“After a tough start she has strived over decades to build a normal life without seeking attention and we don’t underestimate the difficulties she will face rebuilding this.”

It was decided earlier this year, in March, that Grey could appeal against her sentence.

At the time, it was argued that Grey’s sentence had been “excessive” and that an autism diagnosis secured after the trial may have made a difference in the case.

The court had heard that Grey had been charged with unlawful act manslaughter – which requires an unlawful action to take place that caused death.

However, her lawyers argued to appeal judges that no such “base offence” was ever identified during the trial.

Adrian Darbishire KC, for Grey, said: “The trial seems to have proceeded on the basis that some kind of unlawfulness, undefined and unspecified, was sufficient to found this offence of homicide.”

Dame Victoria and her fellow appeal judges agreed, ruling that jurors were not asked to decide “the fundamental question of whether a base offence was established”.

The senior judge continued: “The appellant’s actions that day contributed to Mrs Ward’s untimely death… Had Mrs Ward not died we regard it as inconceivable that the appellant would have been charged with assault.”

Grey’s actions were described as “hostile gesticulation” during the trial.

But this, Mr Darbishire said in the appeal, was “not a crime, otherwise we would have 50,000 football fans each weekend being apprehended”.

The Crown Prosecution Service (CPS) had responded to the appeal, with its barrister Simon Spence KC telling the court it was accepted that “common assault as the base offence was not identified by name”.

After the judges had given their ruling, Mr Spence asked for Grey’s case to be sent back to the crown court for a retrial, which was denied.

In a separate statement, Grey’s legal team said that neither Mrs Ward’s family or Grey’s “should ever have been put through this ordeal”.

They said: “As the court found, once the legal elements of the offence were properly understood, it was clear that there was no proper basis for Ms Grey to be convicted of manslaughter, or indeed any offence. As a result, her conviction was quashed.

“Ms Grey simply should never have been charged.”

The lawyers continued: “Mrs Ward should never have been faced with the choice between cycling on the pavement or cycling on a busy and dangerous ring road.

“Had a clear and well-signed cycle path been in place, safely separating vulnerable pedestrians such as Ms Grey, this accident would never have occurred.

“Equally, misconceived prosecutions and wrongful convictions such as this cause untold pain to all those affected, including the family of the deceased, as well as the person wrongly accused.”

UK

King Charles and Prince Harry’s ‘diary’ clash revealed – as William chosen to lead brother’s old regiment

Published

30 mins ago

May 8, 2024

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King Charles and Prince Harry's 'diary' clash revealed - as William chosen to lead brother's old regiment

The King and Prince Harry won’t meet up on Wednesday during the Duke of Sussex’s trip to the UK due to a timetable clash between a royal garden party and an Invictus Games event.

Harry is in London this week, celebrating 10 years of the Invictus Games.

Since his trip from California was announced, there was press speculation over whether he would spend time with his father amid ongoing tensions between the self-exiled prince and the rest of the Royal Family.

However, a spokesperson for the duke said on Tuesday there would be no meeting because the King was too busy.

This comes about because of a diary clash between the two.

The King, who is thought to have been receiving cancer treatment as an outpatient this week, has been hosting a garden party at Buckingham Palace today.

The monarch was joined by the Queen as he met with guests on one of the warmest days of the year so far.

He was also joined by the Princess Royal, the Duke and Duchess of Edinburgh and the Duke and Duchess of Gloucester.

The King attended three events last week as he resumed engagements, indicating the positive effect of his treatment.

He is due to meet military staff and their families at a training base for the Army’s Royal Engineers on Thursday.

Meanwhile, Prince Harry has arrived at St Paul’s Cathedral for a service to mark the 10th anniversary of the Invictus Games.

Harry joined a congregation of around a thousand people inside the London landmark where he is due to give a bible reading.

Among the guests are Princess Diana’s siblings Lady Jane Fellowes and Earl Spencer, and former Army officer Mark Dyer, who acted as the duke’s mentor, playing the role of a supportive big brother figure for Harry after Diana’s death.

Crowds had gathered around crash barriers to see the duke’s car pull up, and there was a large number of journalists, photographers and cameramen covering his every move.

It comes after Harry spent Tuesday attending a London summit that reflected on the 10th anniversary of the Invictus Games, which stages sporting events for wounded, sick or injured veterans or serving military to aid their recovery.

Harry ‘understanding of father’s diary of commitments’

The duke’s spokesperson released a statement on Tuesday saying: “In response to the many inquiries and continued speculation on whether or not the duke will meet with his father while in the UK this week, it unfortunately will not be possible due to His Majesty’s full programme.

“The duke of course is understanding of his father’s diary of commitments and various other priorities and hopes to see him soon.”

It comes as the King is set to make Prince William Colonel-in-Chief of Harry’s old regiment, the Army Air Corps.

The role was previously held by the King for 31 years during his time as Prince of Wales, and will be handed down on Monday 13 May.

Harry was attached to the regiment for his second tour of Afghanistan between September 2012 and January 2013, working as an Apache pilot.

Harry’s claim that King has ‘other priorities’ doesn’t bode well

I’d just recorded a prearranged interview with the chief executive of the Invictus Games when an unexpected guest arrived at the Invictus conference.

With his arm propped up against the car window to hide his face, Prince Harry was back, a day earlier than most of us had thought.

The duke’s spokesperson said the King was too busy for a catch-up with his son.

But another phrase stood out even more, as the spokesperson added that Harry understands his father has “other priorities”.

Now it’s easy to read too much into a couple of words, but at a time when we’re looking for any signs of reconciliation it doesn’t read well if a son, who spends most of his time in America now, is suggesting his father is prioritising other things over him.

Read the full analysis here.