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German officials now expected the economy to contract by 0.2% in 2024.
Sterling traded blows with the euro on Wednesday as the German government announced the unwelcome news that it had revised down its full-year growth forecasts.
GBP/USD briefly fell to its lowest since early September ahead of today’s crucial US inflation release. The euro meanwhile dipped to its lowest in two months against the US dollar as it laboured under a similar dynamic.
Last night’s FOMC minutes from the Federal Reserve added more fuel to the interest rate fire. A “substantial majority” of committee members were in favour of the bumper 0.5% cut to borrowing costs last month. With headline consumer price inflation set to fall to 2.3% in September, we must now wait to see if a surprise on that front blows the prevailing narrative off course.
The German government downgraded its economic projections and now expects the economy to contract in 2024 before rebounding next year. The prospect of the first multi-year recession since the early 2000s is a bitter bill to swallow for a country that is battling interest rates, depressed consumer mood and political instability. The federal government does forecast the economy to grow by 1.1% and 1.6% in 2025 and 2026 respectively.
Speaking of forecasts, our October-December Quarterly Forecast will be landing in your inbox today. If you’d like to see why now is the perfect time to protect your budget, download your free copy and have a read.
New guidance from the trade body the Investment Association allows UK-listed companies greater scope to pay senior figures higher salaries. A press release issued yesterday argued these new guidelines would encourage greater competition with the American market.
Argentine prime minister Javier Milei has said the time is not right to lift the country’s currency controls. Since taking power, Milei has attempted to artificially protect the Argentine peso under a series of protocols first introduced in 2019 by a previous government.
Joe Biden spoke with Israeli prime minister Benjamin Natanyahu yesterday in an effort to calm rising tensions in the Middle East. Biden is said to have urged his counterpart not to attack Iranian nuclear facilities in retaliation for last week’s missile strikes.
As Hurricane Milton arrives on Florida, millions of residents have been forced to leave their homes and evacuate to neighbouring states. The economic impact is set to be massive with the National Hurricane Center warning it could be “one of the most destructive hurricanes on record for west-central Florida”.
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GBP: Sterling waits for key budget
The impact of the autumn budget on sterling is a key trend to watch this month. Yesterday, Keir Starmer refused to rule out a rise in employer national insurance contributions, while chancellor Rachel Reeves was reported to be considering scrapping previous borrowing commitments.
GBP/USD: the past year
EUR: A bad year for Germany
Nobody can deny that 2024 has been a bad year for Europe’s key economy. News that its economy will go backwards is negative for the euro but the skies should brighten as we move ahead.
GBP/EUR: the past year
USD: Facing inflation threat
Markets have moved a long way in recent days without much data to back it up. That changes today with inflation figures from the US and the US dollar could move sharply up or down against its rivals if that springs a surprise.
EUR/USD: the past year
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