Rising inflation and correspondingly higher interest rates have been providing a boost to the British pound.
The currency rose 1.9 per cent against the US dollar last week, and is up by about 8.1 per cent against the greenback so far this year.
Traders have been pushing the British currency higher for months as the Bank of England raised interest rates for successive months in its battle against inflation.
As inflation started to peak in the US and the eurozone, in the UK it remained stubbornly high.
As such, more interest rate increases have been needed to bring this sticky inflation under control.
Interest rates are now predicted to reach 6 per cent by the end of the year and the markets are already pricing in another 0.5 per cent rise in early August.
“Sterling’s more recent strength is predicated on further interest rate rises, where the Bank of England finds itself in the unenviable position of needing to continue the fight against inflation without tipping an already stuttering economy into recession, " Richard Hunter, head of markets at Interactive Investor, told The National.
“By contrast, the US economy is currently showing signs of heading towards a soft landing, which has resulted in some dollar weakness to the benefit, inter alia, of the pound.”
Bulls and bears
But the big question being asked is: Will the pound continue to go from strength to strength?
The bulls that have been pushing the pound higher on the back of the fastest monetary tightening moves by the Bank of England in a generation may find their charge stumbling on Wednesday as the latest UK inflation numbers are released.
Rising interest rates are all very well when it comes to the strength of sterling, but at some point the market will become convinced that something is tipping over in the economy and that will open the door for the bears to start taking the pound down.
That point may come on Wednesday.
“Elevated levels of inflation, coupled with weaker growth, [are] not necessarily a positive for the currency, even if interest rates are going up,” said David Adams, head of G10 FX strategy at Morgan Stanley.
Currently, the pound is about $1.31 to the US dollar, but many traders predict the British currency will start to decline soon.
Monex USA expects the pound to slip back to $1.29 by the end of the year. JP Morgan Chase is predicting an even harsher slide – down 9 per cent to $1.19 by year-end.
Meanwhile, on the flip side of the coin, Nomura forecast a stronger euro, which will climb by about 3 per cent against the pound to £0.88 by the end of September.
Morgan Stanley is forecasting a 6 per cent rise in the euro by the middle of next year.
“We’re starting to see the hedge fund community thinking about the weaker pound because now it’s very stretched,” said Carlos Fernandez-Aller, head of global FX at Bank of America.
“But we all got the weak pound trade wrong earlier in the year, so we’ll see.”
The interest rate balance
The pound bulls, however, point out that even if Wednesday's inflation number is lower, the Bank of England will still be inclined to raise interest rates and keep it than higher for longer than previously predicted.
As such, the central bank will have tighter monetary policy than the US Federal Reserve and the European Central Bank for some time to come.
“The UK has the highest nominal rates in the G-10 but also the lowest real rates in the G-10,” said Michael Cahill, FX strategist at Goldman Sachs, who sees the pound up about 1.4 per cent at $1.33 by the middle of next year.
“We’ve got still very strong inflation and wages. It calls pretty clearly for tight policy and that should benefit the currency.”
If Wednesday's inflation figures show a larger-than-expected fall, it may lower the demand for higher wages and give the Bank of England pause for thought that at least some of their 13 increases in interest rates are now feeding through into the economy.
Still, even if Wednesday's figures show the stickiness coming out of inflation in the UK, the Bank of England is not thought to be anywhere near the end of its rate-tightening cycle.
However, many analysts contend that the Federal Reserve is close and that US economy is more than likely heading for a soft landing.
As such, it is not only the pound that has been doing well against the dollar.
Last week, the euro touched $1.1248, its highest level against the greenback since February 2022. The Japanese yen has also been hitting multi-month highs against the dollar recently.
Nonetheless, while traders have been riding the pound higher on a wave of increasing interest rates, when those rate increases become detrimental to economic growth, the wave comes crashing down.
On Monday, a quarterly survey by Deloitte showed that optimism among British chief financial officers has plunged.
“The burst of business optimism seen in the spring has faded under the weight of inflation and rising interest rates,” Deloitte's chief economist Ian Stewart said.
“Corporates have responded with an increasing focus on cost reduction and cash control.”
The survey said tight monetary policy was viewed by the chief financial officers as the most serious threat to their business, trumping the concerns around geopolitics and energy prices that have dominated for the past two years.
ACL Elite (West) - fixtures
Monday, Sept 30
Al Sadd v Esteghlal (8pm)
Persepolis v Pakhtakor (8pm)
Al Wasl v Al Ahli (8pm)
Al Nassr v Al Rayyan (10pm)
Tuesday, Oct 1
Al Hilal v Al Shorta (10pm)
Al Gharafa v Al Ain (10pm)
if you go
The flights
Emirates flies to Delhi with fares starting from around Dh760 return, while Etihad fares cost about Dh783 return. From Delhi, there are connecting flights to Lucknow.
Where to stay
It is advisable to stay in Lucknow and make a day trip to Kannauj. A stay at the Lebua Lucknow hotel, a traditional Lucknowi mansion, is recommended. Prices start from Dh300 per night (excluding taxes).
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
if you go
The flights
Emirates offer flights to Buenos Aires from Dubai, via Rio De Janeiro from around Dh6,300. emirates.com
Seeing the games
Tangol sell experiences across South America and generally have good access to tickets for most of the big teams in Buenos Aires: Boca Juniors, River Plate, and Independiente. Prices from Dh550 and include pick up and drop off from your hotel in the city. tangol.com
Staying there
Tangol will pick up tourists from any hotel in Buenos Aires, but after the intensity of the game, the Faena makes for tranquil, upmarket accommodation. Doubles from Dh1,110. faena.com
The specs: 2018 Audi Q5/SQ5
Price, base: Dh183,900 / Dh249,000
Engine: 2.0L, turbocharged in-line four-cylinder / 3.0L, turbocharged V6
Gearbox: Seven-speed automatic / Eight-speed automatic
Power: 252hp @ 5,000rpm / 354hp @ 5,400rpm
Torque: 370Nm @ 1,600rpm / 500Nm @ 1,370rpm
Fuel economy: combined 7.2L / 100km / 8.3L / 100km
More on Palestine-Israeli relations
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What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
Muguruza's singles career in stats
WTA titles 3
Prize money US$11,128,219 (Dh40,873,133.82)
Wins / losses 293 / 149
The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
Groom and Two Brides
Director: Elie Semaan
Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla
Rating: 3/5
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Test squad: Azhar Ali (captain), Abid Ali, Asad Shafiq, Babar Azam, Haris Sohail, Imam-ul-Haq, Imran Khan, Iftikhar Ahmed, Kashif Bhatti, Mohammad Abbas, Mohammad Rizwan(wicketkeeper), Musa Khan, Naseem Shah, Shaheen Afridi, Shan Masood, Yasir Shah
Twenty20 squad: Babar Azam (captain), Asif Ali, Fakhar Zaman, Haris Sohail, Iftikhar Ahmed, Imad Wasim, Imam-ul-Haq, Khushdil Shah, Mohammad Amir, Mohammad Hasnain, Mohammad Irfan, Mohammad Rizwan (wicketkeeper), Musa Khan, Shadab Khan, Usman Qadir, Wahab Riaz
More from Rashmee Roshan Lall
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
UAE currency: the story behind the money in your pockets
French business
France has organised a delegation of leading businesses to travel to Syria. The group was led by French shipping giant CMA CGM, which struck a 30-year contract in May with the Syrian government to develop and run Latakia port. Also present were water and waste management company Suez, defence multinational Thales, and Ellipse Group, which is currently looking into rehabilitating Syrian hospitals.
COMPANY%20PROFILE
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Why your domicile status is important
Your UK residence status is assessed using the statutory residence test. While your residence status – ie where you live - is assessed every year, your domicile status is assessed over your lifetime.
Your domicile of origin generally comes from your parents and if your parents were not married, then it is decided by your father. Your domicile is generally the country your father considered his permanent home when you were born.
UK residents who have their permanent home ("domicile") outside the UK may not have to pay UK tax on foreign income. For example, they do not pay tax on foreign income or gains if they are less than £2,000 in the tax year and do not transfer that gain to a UK bank account.
A UK-domiciled person, however, is liable for UK tax on their worldwide income and gains when they are resident in the UK.
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
If%20you%20go
%3Cp%3E%0DThere%20are%20regular%20flights%20from%20Dubai%20to%20Addis%20Ababa%20with%20Ethiopian%20Airlines%20with%20return%20fares%20from%20Dh1%2C700.%20Nashulai%20Journeys%20offers%20tailormade%20and%20ready%20made%20trips%20in%20Africa%20while%20Tesfa%20Tours%20has%20a%20number%20of%20different%20community%20trekking%20tours%20throughout%20northern%20Ethiopia.%20%20The%20Ben%20Abeba%20Lodge%20has%20rooms%20from%20Dh228%2C%20and%20champions%20a%20programme%20of%20re-forestation%20in%20the%20surrounding%20area.%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Cbr%3E%3Cbr%3E%3C%2Fp%3E%0A
UAE currency: the story behind the money in your pockets
The biog
Hometown: Birchgrove, Sydney Australia
Age: 59
Favourite TV series: Outlander Netflix series
Favourite place in the UAE: Sheikh Zayed Grand Mosque / desert / Louvre Abu Dhabi
Favourite book: Father of our Nation: Collected Quotes of Sheikh Zayed bin Sultan Al Nahyan
Thing you will miss most about the UAE: My friends and family, Formula 1, having Friday's off, desert adventures, and Arabic culture and people
The%20specs
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White hydrogen: Naturally occurring hydrogen
Chromite: Hard, metallic mineral containing iron oxide and chromium oxide
Ultramafic rocks: Dark-coloured rocks rich in magnesium or iron with very low silica content
Ophiolite: A section of the earth’s crust, which is oceanic in nature that has since been uplifted and exposed on land
Olivine: A commonly occurring magnesium iron silicate mineral that derives its name for its olive-green yellow-green colour
RoboCop%3A%20Rogue%20City
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Most sought after workplace benefits in the UAE
- Flexible work arrangements
- Pension support
- Mental well-being assistance
- Insurance coverage for optical, dental, alternative medicine, cancer screening
- Financial well-being incentives
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
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