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26/08/2026

26th Aug: Warsh is on at Jackson Hole, PCE is out today and the Bank of England has warned AI could keep rates higher for longer. 
The BoE published a warning that AI could keep rates higher for longer. If the anticipation of future productivity gains encourage spending and investing before the gains actually materialise, then demand will outpace supply and inflation follows. 
Silvana Tenreyro made the same point from the IMF last week, but where Warsh is betting AI is disinflationary, the timing of this is unlikely to be coincidental.

The main event is the Warsh speech at Jackson Hole. He can address the bond market turmoil and the three dissenting voices on his FOMC.  He wants his five task forces to report back before getting too specific about any plans, which is fair, given how they represent the most consequential review of US monetary policy in decades, but the Market remains pretty keen on getting some specifics now. 
PCE inflation data will also drop today.  This is the Fed’s preferred gauge for inflation and is becoming the most important single monthly data print. The core number is expected to hold at 3.3% year-on-year. A soft reading will support patience and a hot reading will put the September meeting very much back in play.

24/08/2026

24th Aug: UK retail sales fell 0.5%. Government spending caused a £1.8 billion deficit when a surplus was expected, while US had strong services PMI and Q3 growth is tracking double the pace of Q2.
Retail sales fell 0.5% in July. This was expected, as the surge from the World Cup and heatwave demand was not expected to continue month-on-month. 
UK government spending ran a £1.8 billion deficit in July, which typically runs a surplus due to self-assessment tax receipts. 
Receipts came in £1.7 billion higher year on year.  But spending outpaced them anyway. The new financial year deficit is already £56.7 billion, which is £2.3 billion ahead of the OBR forecast.  Healey has a big challenge ahead.  How will he balance the books in his first Budget?

The 50% tariffs on Canadian goods took effect. Trade talks collapsed and Carney announced retaliatory tariffs on US steel and dairy which kick in on September 8th. 
Bessent told CNBC that Treasury buybacks could exceed $4 billion per issue as he plans to make a market in longer-dated securities. The 30-year yield eased briefly but has since reversed most of the decline. The intervention might be working at the margins, but the underlying pressure remains. 
Services PMI hit 56.8 in August (highest since December 2024) and Q3 growth tracking double the pace seen in Q2, confounding the pessimists.

04/08/2026

4th Aug: EY fears the recession risk if they don’t sort out the Strait of Hormuz. US Manufacturing data was the strongest since 2022 and the challenge for John Healey is similar to what Denis Healey faced fifty years ago.

EY has nudged growth forecasts up to 0.9% but it came with a warning that if the Strait of Hormuz stays closed into 2027, the UK could tip into a recession mired by stagflation.  It will all start with higher energy prices. If the MPC is forced to hike when the economy is crying out for a cut… there may be trouble ahead. 
UK manufacturing PMI came in at 51.9, down to the slowest growth in four months and below forecast. 
With low growth and rising inflation, the Healey comparison is valid.  Denis Healey, from the mid-1970’s Labour government, and John Healey, the current Chancellor face rather similar economic challenges. Anaemic growth, high inflation, unstable oil prices, and a budget in less than three months. Denis Healey went to the IMF for a bailout.

Manufacturing PMI was 55.6 - the strongest since May 2022, and the seventh straight month of US manufacturing expansion, driven by tariffs and tax cuts. 
John Williams, the New York Fed President said he expects inflation to ease, but if it doesn’t then the Fed will act. His current base case is that inflation will reach their 2% target in 2028

27/05/2026

27th May - Bank lending to UK businesses hits 30-year low, markets are pricing a US rate hike by year-end and USD gains as the Iran deal is called into question.

Bank lending to UK businesses reached nearly 90% of GDP at the peak in 2008, but has dropped to 59%. SME loans have halved since 2011, when they were 12% to just over 6% today. The gap is being filled by the private credit market, which a sector that Andrew Bailey doesn’t like. He fears trouble lies ahead with the opaque, unregulated lending space.

On the political front, things are fairly quiet ahead of Makerfield on June 18th. Many feel Starmer has resigned himself to the inevitable end, but for the time being, all the jockeying is behind closed doors.

Markets are pricing in a rate hike from the Fed by December. This is a sharp reversal from three months ago, when further rate cuts were the general consensus. As such, Warsh will inherit a Fed committee that is increasingly hawkish, a President in his ear demanding rate cuts, and a growing inflation problem driven by a war he can’t control.

US consumer confidence slipped in May as lower-income households are bearing the brunt of gasoline prices, which are up 50% since the war began and where Trump’s approval keeps sliding ahead of the midterms in November, the pressure to close a deal is as much political as it is diplomatic.

18/05/2026

18th May - Gilt yields are at a 30 year high, business investment is on hold and the leadership challenge is on pause for the by-election.
Reform won a significant majority in the Makerfield local election a couple of weeks ago so the by-election is no gimme for Burnham.  
Starmer is a lame duck in Westminster and Reeves is facing similar uncertainty over her future. She will likely loses her job under new leadership, but there are questions over who would replace her, and who could improve the economic mess they would inherit, so some fear she may get a stay of execution. 
Employment data is due out tomorrow and Wednesday’s CPI inflation for April is expected to confirm a June rate hike is on the cards.

It’s Warsh’s first day as Fed Chair. He joins an FOMC that is increasingly hawkish as inflationary pressure is rising and without Miran calling for rate cuts, he looks likely to lose any rate cut debate for the time being. 
Trump-Xi summit is being seen as a strategic win for Beijing. Xi arrived with a clear agenda and delivered it, while Trump arrived under domestic pressure and things wrapped up with no big deal for Donald.

13/05/2026

13th May - Four ministers have resigned and pressure is mounting. Starmer told the Cabinet he’s not going anywhere, but he is due to meet Streeting this morning.
About 100 MPs have signed letters asking Starmer to set a timetable for his departure, but about 100 others have signed a joint statement of support and it seems that no single candidate has the numbers necessary under Labour Party rules.
The gilt market is concerned and the cost of borrowing has risen way past the point where Truss and Kwarteng crashed the economy. And the futures markets are now pricing in 2-3 rate hikes by December.

Warsh will get his final Senate confirmation and Powell’s term expires in two days.
Goolsbee thinks the US has an inflation problem in the service sector, which may suggest the underlying economy is overheating. Warsh will walk into a Fed that is increasingly hawkish, with a President who wants rate cuts, and an economy that’s overheating in exactly the wrong places. Good luck Kevin!

05/05/2026

5th May - This time next week, Labour could have a new leader and a new Chancellor as markets are pricing in wholesale changes in Downing Street.
Both Labour and the Tornies are expected to lose out as Reform UK and the Greens are expected to take control of several councils in the local elections and the SNP has a real chance north of the border.
If Labour’s performance is bad enough, then pressure will mount for leadership change. The economy won’t save him as NatWest has the UK growing at just 0.4% this year, which is even lower than the IMF’s latest forecast.

Focus remains on the Fed and Warsh will take over the Fed Chair from May 16th.
He’ll inherit a Fed that remains politically independent, but Powell plans to stay on the board a little longer, just to help ensure that remains the case.
There are at least three hawks who want tighter language and while Trump’s other mole, Miran, is already in situ, many expect Warsh will need to govern by persuasion from day one.

28/04/2026

28th Apr - UK retail sales posted the worst year-on-year decline since the survey began in 1983 and -68 was down from -52 in March.
Consumer confidence is also at the lowest since October 2023 and the CBI is calling on the Government to help.
The MPC is widely expected to hold this week and the Bank of Japan also held this morning as central banks opt to sit on their hands, waiting for clarity.

The Fed meeting will likely be Powell’s last as Fed Chair. The Warsh confirmation is all but done now the DOJ dropped the investigation and Tillis confirmed his support.
The Fed is expected to hold, but CPI inflation is already showing its biggest increase in nearly four years, which will add to the debate around how entrenched the oil price is… or if it is transitory.

27/04/2026

27th Apr - Will the Warsh nomination go ahead now the DOJ has dropped the investigation into Powell?
The MPC and the Fed meet this week and both are likely to keep rates on hold. Markets are pricing in virtually no chance of a move.
UK retail sales beat forecast in March but Consumer confidence saw the largest quarterly drop in four years - not exactly the perfect backdrop as we go to the polls in the local elections next week.
Starmer seems to have survived the Mandelson fall-out, but the local elections will likely deliver his next test of his leadership.

Trump was rushed away and the shooter was dealt with. After a thorough review, the King’s trip will still go ahead.
Trump has backed down from his witch hunt with Powell and the DOJ is ending the probe, handing the case to the Fed’s own inspector general instead. This should effectively remove the block from Senator Tillis and clear the way for the Warsh confirmation.

24/04/2026

24th Apr - PMIs showed UK activity picking up, but input prices and costs are increasing and markets are pricing a 70% chance of a rate hike by June.
Any increased activity was a short-term boost from purchases rushed through ahead of feared price rises and supply shortages as a record-breaking surge in business costs showed input prices rose at the steepest rate in more than three years.
Sarah Breeden is concerned about the global economy. She thinks the Hormuz closure is the worst energy shock in living memory and she warned that private credit, sovereign debt and stretched asset valuations are all exhibiting similar traits to the 2007 CDO crisis.

The DOJ investigation into Powell will continue, regardless of the impact on Warsh’s nomination. Senator Tillis is still blocking Warsh and Powell may stay on as interim chair.
Ontario Premier Doug Ford thinks the Canadian boycott of the US is costing American businesses tens of billions. He pointed out that Canada didn’t start the tariff war after US Commerce Secretary Lutnick called the boycott insulting.

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