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Sterling recovered slightly during Tuesday's session.
The pound regained its footing yesterday to post a much more positive day against its main rivals. Tuesday was light on news but provided a reminder of just how quickly things can change in currency markets.
GBP/EUR climbed by around a third of a per cent, roughly the same margin as GBP/USD. It was a more encouraging day for the euro against the dollar, although its 0.25% rise didn’t really scratch the surface of recent falls.
The Australian dollar rose against the US dollar after its central bank opted to hold interest rates at 4.35%. Other risers on Tuesday included the Canadian dollar and the South African rand.
Bank of England official Huw Pill said that interest rate reductions could be a “reward” for lower inflation. Homeowners may receive his present with gritted teeth after the pain of the last few years, but his words do seem to represent something of a tone shift from the Bank of England. While central bankers still say they need more evidence, it feels as though momentum is building.
As the only member of the committee who voted for a rate decrease, you may not be surprised that the Bank’s Swati Dhingra called for an immediate reduction to interest rates yesterday. Dhingra warned that the economy may be cause undue pain if rates were left at 5.25% for much longer.
Total US household debt increased from $17.29tr to $17.5tr in Q4. To put that in context, that means US households have a combined debt roughly equal to five times the UK’s annual GDP.
These figures include mortgages, student loans, car repayments and all the other lines of credit that form daily life. They are, however, disconcertingly large and add to the impression that American consumers are saddled with far too much debt.
In other new, the once all-conquering Canary Wharf property portfolio was dealt another blow with the sale of 5 Churchill Place. The office building, bought by Chung Kei Group for £270mn in 2017, was sold for a 60% discount at £110mn to Menomadin Group.
Donald Trump has been denied immunity from the election interference case by a US court. The case is probably the most dangerous of the four Trump faces before the November election, although his legal team indicated they would appeal the decision.
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GBP: Constructing better times
The pound recorded gains of around a third of a per cent against both the euro and the US dollar on Tuesday.
The UK’s construction industry is moving in the right direction. Even if the S&P Global Construction PMI remained in negative territory (below 50) in January at 48.8, that marked an increase from last month’s 46.8 and the slowest rate of contraction since August.
GBP/USD: the past year
EUR: Retail weakness
The euro once again lost value to the pound but did fight back to finish the day up over the dollar.
Eurozone retail figures for December showed that retail sales fell by 1.1% month-on-month, driven by a steep drop in online sales.
GBP/EUR: the past year
USD: A debt mountain
The US dollar fell back against the pound and the euro yesterday.
Joe Biden’s decision to pause student loan repayments during the pandemic certainly helped the US economy, but it does not seem to have made a dent in the wall of consumer debt. The US again recorded higher debt within households, and repayments are shooting up the longer interest rates are held at higher levels.
USD/EUR: the past year
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