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The pound has gained close to 1.0% against the dollar since this time last week.
Sterling made marginal losses yesterday against the US dollar but has regained some strength this morning. The euro also gained just over a quarter of a per cent against the US dollar yesterday and remains strong this morning.
Matching comments from the Bank of England’s (BoE) Huw Pill on Tuesday, the European Central Bank’s Consumer Expectations Survey reported inflation expectations for the euro area over the next 12 months increased to 4.0% in September, from 3.5% in August.
Federal Reserve chair Jerome Powell said little about rates in his speech yesterday afternoon but did say the US central bank must combine “intellectual rigour” with “flexibility and agility” for its future forecasts.
The Tankan sentiment index for manufacturers in Japan rose to +6 in November 2023 from +4 in October, reflecting a marked improvement in business confidence for the first time in three months.
Retail sales in the eurozone declined for the third consecutive month in September, losing 0.3% and exceeding market forecasts of a 0.2% decrease.
In the US, 30-year mortgage rates fell for the second week in a row, to 7.61%, hitting the lowest point for over five weeks. It also reflects the biggest slump since July 2022 as the Federal Reserve and Treasury stated government borrowing needs were lower than expected.
Yesterday Lloyd’s of London, the world’s biggest insurance market, was accused of ‘reparations washing’ over its response to an academic review that documents its “significant role” in making the transatlantic slave trade possible.
The RMT union has reached a possible deal with train operators in Britain to resolve the long-running national rail dispute, as fears mounted over a repeat of last year’s strikes during the festive period. The union has drafted a memo to ballot members on a new offer to backdate pay rises and present more job opportunities.
Today is relatively quiet on the data front with a speech from Powell this evening. Tomorrow morning, all eyes will be on UK GDP figures which are forecast to remain stagnant in September.
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GBP: UK to avoid a recession
Professional services firm PwC upgraded its forecasts for the UK economy, which it expects to grow 0.5% in GDP this year and next. PwC’s previous outlook, released in April, predicted 0.1% growth for 2023.
GBP/USD: the past year
EUR: Shares set for a muted open
European shares have struggled for direction this week and were set for a muted open this morning. Yesterday the ECB chief economist said he had not seen enough progress in taming inflation.
USD: Powell’s speech remains in focus
The US dollar-to-pound rate is 0.2% lower than this time yesterday, taking its weekly losses to just under 1.0%. A cautious tone remains for US investors and Powell’s speech remains in focus.
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