📈 Pound Takes A Leap

The pound hit a high against the dollar

August 27, 2024

This is Cliff Equity, the UK’s business newsletter that keeps you informed on what’s important in tech, business and finance in less than 5 minutes

In today’s stories:

  • Pound Takes a Leap Forward: Jay Powell's Cryptic Rate Cut Hints Make UK Travel and Markets All the Rage

  • Shop Prices Fall as Retailers Rush to Clear Summer Stock

  • Out with the New, in with the Old: Ikea’s Second-Hand Site is Here to Rescue Your Furniture!

The summary: With the pound rising and US rate cuts on the horizon, it’s a jolly time for UK travellers and investors, though let’s not get too carried away – the inflation drama isn’t quite over yet!

The details:

  • The pound hit a high against the dollar, thanks to US Fed chair Jay Powell hinting at future rate cuts—though he was coy on when or how many, leaving markets to daydream.

  • Powell suggested the US economy is cooling off, with the job market no longer “overheated,” while inflation remains a lingering guest, refusing to exit stage left.

  • The Bank of England's Andrew Bailey, meanwhile, dampened early victory laps over inflation, stressing it’s far from over, though a bit less scary than expected.

  • As markets celebrated with pound surges, bond yields easing, and stocks soaring, the sober economists warned: don’t pop the champagne just yet—pace yourselves.

Why it matters: The pound's surge means UK holidaymakers can sip their overpriced New York lattes with slightly less remorse, as their pounds stretch further. Meanwhile, investors are giddy over potential US rate cuts, but the cautious whisper from economists suggests this euphoria might be as premature as a sunny British bank holiday. Ultimately, inflation’s still lurking, so don’t get too comfortable just yet – the financial rollercoaster isn’t ready to let us off.

The summary: Shoppers can enjoy a rare reprieve with prices falling thanks to summer sales, but brace yourselves—climate and global challenges may soon put inflation back on the menu!

The details:

  • Retailers have slashed prices to clear summer stock, resulting in shop prices falling for the first time in nearly two years—down 0.3% compared to last August.

  • Non-food items took the biggest dive, with prices dropping by 1.5%, while food inflation slowed to its lowest since November 2021, easing to a still not-so-palatable 2%.

  • Fresh food prices, particularly for fruit, meat, and fish, saw their most significant dip since December 2020, with inflation cooling to a mere 1%.

  • While price cuts might bring a sigh of relief, climate woes and geopolitical tensions could serve up a fresh helping of inflation next year—just when we thought we’d caught a break.

Why it matters: Retailers cutting prices is a rare treat, much like finding a fiver in an old coat pocket—just in time for your next grocery run. But don’t pop the champagne yet, as climate chaos and global squabbles could have prices back on the rise before you’ve finished your discounted shop. For now, enjoy the bargains while they last, though it seems inflation is simply catching its breath for another lap.

The summary: Ikea's second-hand marketplace is set to make sustainable living easier, save us from landfill clutter, and bring a whole new meaning to giving your old flatpack a stylish second life!

The details:

  • Ikea's new "Preowned" marketplace lets customers flog their old flatpack treasures directly to one another, rather than faffing about on eBay or Gumtree.

  • The scheme is already furnishing homes in Madrid and Oslo, with plans to go global by December – aligning nicely with Ikea's sustainability agenda and profit margins.

  • Environmentalists will be pleased: this could push the furniture giant towards sturdier, more sustainable designs, as reusing rather than binning becomes trendy again.

  • And with brick-and-mortar stores being a costly affair, Ikea is keen to move into the virtual world, where even your second-hand Billy bookcase gets a second wind.

Why it matters: Ikea's foray into second-hand sales could turn your old Malm into a sustainable moneymaker, while helping the planet breathe a little easier. By keeping furniture out of landfills and reimagining the resale game, they’re proving that flat-pack doesn't have to mean throwaway. And with fewer physical stores needed, your next Ikea haul might just involve less time lost in the maze and more time on the sofa.