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.
About Okadoc
Date started: Okadoc, 2018
Founder/CEO: Fodhil Benturquia
Based: Dubai, UAE
Sector: Healthcare
Size: (employees/revenue) 40 staff; undisclosed revenues recording “double-digit” monthly growth
Funding stage: Series B fundraising round to conclude in February
Investors: Undisclosed
More on Quran memorisation:
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
NEW%20PRICING%20SCHEME%20FOR%20APPLE%20MUSIC%2C%20TV%2B%20AND%20ONE
%3Cp%3E%3Cstrong%3EApple%20Music%3Cbr%3EMonthly%20individual%3A%20%3C%2Fstrong%3E%2410.99%20(from%20%249.99)%3Cstrong%3E%3Cbr%3EMonthly%20family%3A%20%3C%2Fstrong%3E%2416.99%20(from%20%2414.99)%3Cstrong%3E%3Cbr%3EIndividual%20annual%3A%20%3C%2Fstrong%3E%24109%20(from%20%2499)%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EApple%20TV%2B%3Cbr%3EMonthly%3A%20%3C%2Fstrong%3E%246.99%20(from%20%244.99)%3Cstrong%3E%3Cbr%3EAnnual%3A%20%3C%2Fstrong%3E%2469%20(from%20%2449.99)%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EApple%20One%3Cbr%3EMonthly%20individual%3A%20%3C%2Fstrong%3E%2416.95%20(from%20%2414.95)%3Cstrong%3E%3Cbr%3EMonthly%20family%3A%20%3C%2Fstrong%3E%2422.95%20(from%20%2419.95)%3Cstrong%3E%3Cbr%3EMonthly%20premier%3A%20%3C%2Fstrong%3E%2432.95%20(from%20%2429.95)%3C%2Fp%3E%0A
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
The Matrix Resurrections
Director: Lana Wachowski
Stars: Keanu Reeves, Carrie-Anne Moss, Jessica Henwick
Rating:****
RoboCop%3A%20Rogue%20City
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The specs
Engine: 3.9-litre twin-turbo V8
Power: 620hp from 5,750-7,500rpm
Torque: 760Nm from 3,000-5,750rpm
Transmission: Eight-speed dual-clutch auto
On sale: Now
Price: From Dh1.05 million ($286,000)
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
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.
In Full Flight: A Story of Africa and Atonement
John Heminway, Knopff
Red Joan
Director: Trevor Nunn
Starring: Judi Dench, Sophie Cookson, Tereza Srbova
Rating: 3/5 stars
if you go
The flights
Etihad, Emirates and Singapore Airlines fly direct from the UAE to Singapore from Dh2,265 return including taxes. The flight takes about 7 hours.
The hotel
Rooms at the M Social Singapore cost from SG $179 (Dh488) per night including taxes.
The tour
Makan Makan Walking group tours costs from SG $90 (Dh245) per person for about three hours. Tailor-made tours can be arranged. For details go to www.woknstroll.com.sg
UAE currency: the story behind the money in your pockets
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
