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The British economy expanded 0.7% on quarter one of 2024, beating initial expectations
Sterling weakened fractionally against the euro on Thursday while having an up-and-down sort of day against the US dollar. The biggest economic story of yesterday was the resurgence of the euro, which strengthened against all major currencies (albeit not by a great deal).
The US dollar has survived unscathed so far after a US presidential debate overnight where President Biden faltered alarmingly against Donald Trump. Democrats are said to be in panic mode after Biden appeared confused.
The British economy expanded 0.7% on quarter one of 2024, slightly higher than forecasts of 0.6%. This is the highest expansion in over two years for GDP, ending the recession the UK entered last year.
Yesterday, inflation in Australia rose to 4.4%, raising worries that maybe inflation isn’t defeated after all. Indeed, inflation expectations were also elevated in Europe, leading to a fall in the equities markets and then onto sterling. This morning, we will get much more detail on that with new inflation data from France, Italy and Spain.
The Bank of England pointed out yesterday that many householders on fixed mortgage deals have yet to feel the pain of higher interest rates. More than three million are still paying less than 3%.
A report from HMRC yesterday found there will be one million UK taxpayers paying the 45% top tax rate this year, due to fiscal drag. That is twice as many as three years ago.
Today is relatively quiet for European economic data, however, investors will receive the latest US PCE price index, personal income and personal spending figures this afternoon.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Pound loses ground to USD and EUR
Sterling drifted against its main rivals the euro and USD yesterday but it wasn’t all bad news. After a dearth of data lately, investors heard UK GDP grew 0.7% on quarter one beating forecasts of 0.6%
GBP/USD past year
EUR: Mixed day for euro
It’s been a mixed 24 hours for the euro, with rises against the yen, Aussie and Canadian dollar but treading water against the pound, US dollar and rupee. After today’s inflation data, Monday starts with PMI data across the eurozone.
EUR/USD past year
USD: Jobs data and Jerome Powell back in focus
A similar story for the US dollar, with positive moves against the yen, Canadian and Australian dollars but little against the pound and euro. The markets will be looking at the fallout from the presidential debate today, along with personal income data this afternoon. Next week features plenty of employment information as well as the FOMC minutes and commentary from Federal Reserve chair Jerome Powell.
USD/GBP past year
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