Connect with us

News

Sterling surges to one-year high after UK growth and US inflation surprises

Published

on

Sterling surges to one-year high after UK growth and US inflation surprises

Unlock the Editor’s Digest for free

Sterling rose to its highest level against the dollar in almost a year on Thursday after the UK economy grew more than expected in May while lower than forecast US inflation drove a broad retreat in the greenback.

The pound rose as high as $1.2947, the highest level since late July 2023, and was later trading up 0.5 per cent at $1.2907 after data showed the UK economy grew 0.4 per cent, having flatlined in April. The data comes as an early boost to the new Labour government, which has declared growth its “national mission”. 

The British currency was also lifted by a broader decline in the dollar after US inflation came in below expectations in June at 3 per cent. That pushed the dollar down 0.6 per cent against a basket of six currencies.

Advertisement

“The pound has been supported by the release of further evidence revealing that the UK economy is recovering more strongly than expected,” said Lee Hardman, currency analyst at MUFG.

Traders in swaps markets are now evenly split on the likelihood of a Bank of England rate cut next month. Earlier this week, they had been pricing in a two-thirds likelihood, before BoE chief economist Huw Pill suggested that he was not yet ready to change his vote in favour of a rate cut. 

Sterling’s strength comes in the first week of a new Labour government, which investors have welcomed over hopes of a new era of relative political stability. 

This week, Rachel Reeves, the chancellor, set out far-reaching proposals on planning reforms to “fix the foundations of Britain’s economy” and “get Britain building again”.

“Simply shifting the narrative towards a more energetic drive for change could, on the margin, be helpful for both investment and growth,” said Shahab Jalinoos, global head of foreign exchange research at UBS Investment Bank. 

Advertisement

He added that the UK now had “arguably the most stable government in the G7 over the next five years”, so sterling “should finally see the tide of structural flows move in its favour for the first time in the post-Brexit-vote era”.

The pound’s strength comes after a snap election in France spooked investors and resulted in a hung parliament that has weighed on the euro.

This week, the Investment Institute at BlackRock — the world’s largest asset manager — moved its tactical position on UK stocks from “neutral” to “overweight” in the belief that “political stability and a growth pick-up could improve investor sentiment”.

Michael Metcalfe, head of macro strategy at State Street, one of the world’s largest custodian banks, said recent positivity had prompted asset managers to eliminate their underweight in the UK currency this quarter, with neutral positioning leaving “plenty of room for further sterling strength”.

Advertisement
Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

News

Pakistan reaches $7bn loan deal with IMF

Published

on

Pakistan reaches $7bn loan deal with IMF

Unlock the Editor’s Digest for free

Pakistan has reached a deal for $7bn in medium-term financing from the IMF, offering the government a reprieve as it seeks to navigate the crisis-hit country out of soaring public debts and weak economic growth.

The IMF announced on Friday that it had reached a staff-level, or preliminary, agreement with Prime Minister Shehbaz Sharif’s government for a 37-month financing programme under a so-called extended fund facility.

The deal, which is Pakistan’s 24th bailout with the multilateral lender, will now go to the IMF’s executive board, which is expected to approve the loan, though it did not specify a date that it would do so.

Advertisement

“The programme aims to capitalise on the hard-won macroeconomic stability achieved over the past year by furthering efforts to strengthen public finances, reduce inflation, rebuild external buffers and remove economic distortions to spur private sector led growth,” the lender said in a statement.

As part of the deal, Pakistan agreed to phase out incentives for its special economic zones, which were launched in 2012 to attract international investment, and expand the tax net to include more of the country’s agricultural sector, a politically sensitive issue.

Pakistan has suffered one of Asia’s worst recent economic crises, with the country of 240mn teetering on the brink of default last year before the IMF granted a short-term $3bn rescue package. Inflation surged as high as 38 per cent as Islamabad struggled to bring down a ruinous debt burden, which swallowed 57 per cent of government revenue in interest payments.

China, Saudi Arabi and the UAE, to whom Pakistan owes about half of its debt repayments for this year, are expected to roll over the terms of their loans for another year, said Muhammad Aurangzeb, the finance minister.

Inflation has fallen to 12.6 per cent in June and central bank reserves — which dipped in February 2023 below $3bn, less than three weeks’ worth of imports — are now above $9bn. The economy contracted last year, but has returned to growth. 

Advertisement

To meet the IMF’s conditions, Sharif’s government has announced a rash of politically unpopular reforms, including tax rises that primarily fell on salaried workers and increases to household energy tariffs. Aurangzeb previously told the Financial Times that the loan would not be Pakistan’s last programme with the IMF if the government failed to significantly boost tax revenues.

The fund praised Pakistan’s plans in its latest budget approved last month to increase government revenue by 1.5 per cent of GDP in this fiscal year and by 3 per cent by the end of the programme.

But measures have generated a backlash, including from the government’s coalition partners, on which it depends to remain in power after a disputed election in February.

Khurram Husain, a business and economics commentator in Karachi, said that the deal would help put to rest concerns about a default and “anchor expectations for continued stability”. But its success depend on the government maintaining the political will to stick with its reforms, he added.

“The possibility that the government will develop cold feet and start backpedalling on some of the measures that they have announced is very real and it should not be underestimated.”

Advertisement

“The conditionality is now tougher and the authorities will have to sustain the policy effort for longer,” said Krisjanis Krustins, a director in Fitch. “As economic and financing conditions improve, the temptation to loosen policies will increase, as in the past.”

Continue Reading

News

Homeless person allegedly abducts 4-year-old at California restaurant amid uptick of crime

Published

on

Homeless person allegedly abducts 4-year-old at California restaurant amid uptick of crime

A 4-year-old girl was allegedly kidnapped from a California restaurant by a suspected homeless woman, police said.

The Santa Monica Police Department said a “frantic” grandmother called police at 12:11 p.m. local time when she and her 4-year-old granddaughter were having lunch at a Panda Express restaurant.

Police were on the scene “within minutes” desperately searching for the disappeared child, authorities said.

ILLEGAL DEPORTED 3 TIMES RETURNS TO CALIFORNIA AND LIGHTS DEADLY HOUSE FIRE WITH MOM, CHILDREN INSIDE: SOURCE

A woman said that her 4-year-old granddaughter was abducted while they were eating at Panda Express. (Universal Images Group/Getty)

Advertisement

Authorities quickly gathered video images of potential suspects and began sending additional units to the general area of the restaurant.

Police said there were more than 30 law enforcement officers searching for the suspect.

Video footage revealed that the suspect was a heavyset white female in her 30s.

Santa Monica police car

People walking, shopping. Santa Monica Downtown, pedestrian street. (iStock)

At 12:37 p.m., officers located the suspect and child in a room at the Holiday Motel.

“Thankfully, the child was unharmed, and the suspect was taken into custody,” police said.

Advertisement

OAKLAND POLICE REFUTE CLAIMS IT IS DISTORTING MASSIVE CRIME FIGURE DROP

Police said “no stone was left unturned” in their investigation.

“Our heartfelt best wishes go out to the child and her family as they deal with the shock of this ordeal,” police said. “We will do everything we can to make sure they are helped through this time and also to make sure no stone is left unturned in the investigation.”

Authorities, who did not immediately release the name of the suspect, said she was booked on suspicion of kidnapping.

Santa Monica Promenade

A 73-year-old woman was assaulted in May by a homeless person. (Morgan Lieberman/Getty Images)

The alleged abduction comes after a 73-year-old woman was assaulted by a homeless man in May.

Advertisement

The woman said she was on her daily morning walk and tried to get out of his way so he could pass, but “he intentionally pushed her to the ground,” resulting in a back injury and cuts on her hands, police said. 

About a week beforehand, a homeless man was arrested for the attempted rape of a female jogger.

Santa Cruz County Sheriff vehicle

Santa Monica residents said that the town is “not what it was.” (Santa Cruz County Sheriff’s Office/Facebook)

One Santa Monica resident said that the once-idyllic coastal town is “not what it was.”

CLICK HERE TO GET THE FOX NEWS APP

“Everybody knows that Santa Monica is not what it was three or four years ago,” one resident told FOX 11. “Every day is something new.”

Advertisement

Advertisement
Continue Reading

News

Rudy Giuliani’s bankruptcy case thrown out by US judge

Published

on

Rudy Giuliani’s bankruptcy case thrown out by US judge

Unlock the US Election Countdown newsletter for free

Former New York mayor Rudy Giuliani can no longer use bankruptcy proceedings to avoid a $148mn judgment for defaming two US election workers after a judge threw out his case, clearing the way for them to pursue the homes and earnings of the one-time lawyer to Donald Trump.

In his order on Friday, judge Sean Lane said Giuliani had “failed to provide an accurate and complete picture of his financial affairs in the six months that this case has been pending” and had “not even retained an accountant, which is the most rudimentary of steps”.

The 80-year-old filed for Chapter 11 protection in December, after being found liable for spreading a conspiracy theory about a mother and daughter who counted votes in Georgia during the 2020 presidential election, leading to angry mobs gathering outside their home.

Advertisement

Lawyers for Ruby Freeman and Wandrea “Shaye” Moss had argued earlier in the week that Giuliani was using the bankruptcy as a “pause button on his woes”, and was trying to “thwart” creditors’ multiple attempts to collect.

Judge Lane agreed that there had been a “troubling” lack of financial transparency, citing Giuliani’s failure to disclose that he had a contract for an upcoming book, and that he received “at least $15,000 per month for hosting a radio show on WABC and between $100,000 and $150,000 from his work hosting a podcast called America’s Mayor Live”.

His order also barred Giuliani from refiling for bankruptcy within a year.

A lawyer for Freeman and Moss, Rachel Strickland, said her clients had “already waited too long for justice” and were “pleased the court saw through Mr Giuliani’s games”. She added that the duo’s legal team would begin enforcing the judgment against Giuliani “ASAP”.

Giuliani, in a surprising move, did not oppose the dismissal of the bankruptcy case. A spokesman said he had been subjected to “voluminous and overly broad discovery requests . . . intended to harm the mayor and destroy his businesses”.

Advertisement

He added: “we are confident that — in the long run — our system of justice will be restored and the mayor will be totally vindicated.”

Giuliani, who was Trump’s personal attorney during and after the 2020 presidential election, is also facing criminal charges over alleged election interference in Georgia and Arizona. He has pleaded not guilty in both criminal cases and is appealing against the defamation judgment.

In a filing ahead of the decision, lawyers for other creditors, including a woman who has sued Giuliani over an alleged sexual assault, said he had treated the bankruptcy process as a “joke”. He was “hiding behind the facade of an elderly, doddering man who cannot even remember the address for his second multimillion-dollar home and claims impending homelessness if he must sell that [home]”, they added.

Giuliani, who once owned several properties, has an apartment on Manhattan’s Upper East Side, and a condominium in Florida’s Palm Beach. His lawyers said the assets, along with “some jewellery perhaps” would yield about $8mn. Giuliani had previously reported assets of $10.6mn.

Among Giuliani’s moneymaking endeavours is his own branded coffee line, ‘Rudy Coffee’ © Rudy Coffee

A former US attorney for the Southern District of New York, Giuliani had his legal licence in the state revoked this month. His lawyers argued he would have limited earning power as a “80-year-old disbarred attorney”.

Advertisement

Strickland disagreed, saying that “when Mr Giuliani is working for himself . . . he will be hustling for Rudy Coffee and a podcast and all the rest of his moneymaking endeavours”. Giuliani launched a coffee brand earlier this year, with the slogan “fighting for justice”.

By avoiding high legal fees, “creditors will be able to hold America’s Mayor accountable for the harms he has caused”, Strickland added.

Besides the $148mn owed to Freeman and Moss, Giuliani has revealed that he has almost $1mn in unpaid taxes, as well as hundreds of thousands of dollars worth of unpaid legal fees. He is also being sued by voting technology companies Dominion and Smartmatic.

During the bankruptcy proceedings, Giuliani had made dozens of Amazon purchases, buying a tripod apparently for his podcast, an extra-extra-large “Men’s Active Performance Tech T-Shirt”, and a bottle of “tanning moisturiser”, according to court filings.

Advertisement
Continue Reading
Advertisement

Trending