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The euro made modest gains over the pound and US dollar
Sterling briefly reached its highest level of the young year against the US dollar in yesterday’s session before its rally lost some steam. The euro, meanwhile, had a far more positive day, recording small but spirit-boosting gains against the pound and the US dollar.
GBP/USD remained a quarter of a per cent up at the European close, while EUR/USD climbed by a similar margin. The pound struggled against the euro, however, ending yesterday down by a third of a cent.
German inflation rose in December, up to 3.7% compared to 3.2% in November. The news is likely to dampen growing expectations that the European Central Bank (ECB) will announce rate cuts in the first half of 2024. French inflation also rose to 3.7% in December from 3.5% last month, although that data often has lesser bearing on markets.
The eurozone flash inflation read arrives today and markets are expecting the headline number to nudge up from 2.4% to around the 3% ballpark.
In the UK, the S&P Global Services PMI for December came in above expectations at 53.4 (i.e. slightly above neutral sentiment) at the final read. That’s well above November’s 50.9 and represents good news for the British services sector, particularly as comparable European surveys have languished below 50 for some time.
It was a quiet day for the usually loud US market, although today’s non-farm payrolls are always closely watched, even if the Federal Reserve appears to prefer other metrics. The ISM services PMI meanwhile is expected to hover around last month’s levels.
Up to 1.5 million UK households are expected to face a sharp increase in their mortgage costs this year. A Goldman Sachs study found homeowners could pay an additional £19bn in 2024 as fixed-rate deals expire.
Another blow for UK listings as travel operator Tui’s board has recommended it delist from the London Stock Exchange. Shareholders had earlier shared their view that they would prefer the company be listed solely on the Frankfurt exchange, as opposed to the current dual-listing system.
UK prime minister Rishi Sunak has suggested he expects the UK election to take place in the second half of 2023.
Good news in the climate fight as Germany’s greenhouse gas emissions fell in 2023 to their lowest level in 70 years. The country emitted 73 million fewer tonnes than in 2022 as it shifts away from the coal industry.
Just when you thought more Trump scandals were impossible, another one pops up. The Republican nominee-in-waiting has been accused of accepting hefty payments from China and other state actors during his stay at the White House just as 2024 election campaigning heats up.
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GBP: S&P boost
Sterling picked up around a quarter of a per cent against the US dollar while falling by a similar amount against the euro.
The services-heavy UK economy was dealt a boost yesterday, with the S&P PMI coming in above expectations at 53.4. That followed a host of European nations failing to breach 50.
GBP/USD: the past year
EUR: Fall in German retail sales
This morning, we heard German retail sales fell more than expected in November, dropping by 2.5%, compared with forecasts of a 0.1% decline. This marks the biggest monthly decline since April 2022 and reverses the 1.1% growth seen in October.
USD: Waiting for movement
The US dollar jumped up against its major rivals yesterday, buoyed by the possibility of interest rates being kept higher for longer.
US markets remain transfixed by the possibility of Federal Reserve rate cuts, but as yet there hasn’t been much movement. FOMC minutes released on Wednesday didn’t do much to move the dial, and it feels very much like a waiting game until the next big movement.
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