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The pound made marginal gains against the US dollar yesterday as economic data remained quiet and investors shifted positions ahead of Powell’s testimony and key US labour market data later in the week.
The Turkish lira lost 0.65% against the US dollar yesterday as the yield on Turkey’s 10-year government bond soared to 36%, topping the November 2023 high as investors anticipate rates will need to remain higher for longer to tame rising inflation, which investors expect to soar above 70% in May. In February, inflation in Turkey rose to 67%, the highest since November 2022.
Yesterday, Bitcoin rose by almost 6% to €66k, nearing the all-time high of €69k reached in October 2021. This comes following the launch of US Bitcoin EFTs (exchange-traded funds) in January, which received major funding from BlackRock Inc and Fidelity Investments.
The Guardian reported yesterday that UK middle classes are ‘struggling, despite incomes of up to €60,000 a year’. This is based on a report from the abrdn Financial Fairness Trust which highlighted how Britain’s insecure jobs market and high housing costs are struggling to maintain a decent living standard.
Apple has been charged €1.84bn (£1.6bn) by the European Union by raising the cost of music streaming by imposing illegal restrictions on streaming apps like Spotify. Hundreds of iPhone users paid around £3 a month more for Spotify due to Apple’s fees. After this announcement, Apple shares fell by more than 2.5% on Monday, representing around $70bn (£55bn) in losses.
This afternoon, we’re due to receive the latest ISM services PMI for the US which is forecast to come in at 52.9 in February, from 53.4 in January. Remember, any reading below 50 indicates an economic contraction and a reading of 50 represents no change in the economic environment.
In the eurozone, investors turn their attention to the European Central Bank’s (ECB’s) upcoming policy meeting on Thursday. Policymakers are widely anticipated to maintain interest rates at current record highs and any indications from president, Christine Lagarde regarding updated economic projections and borrowing costs are likely to be scrutinized.
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 business account manager on 020 3918 7255 to get started.
GBP: 1 in 5 first-time buyers got a 35-year mortgage
Record UK house prices and higher mortgage rates have driven first-time buyers into taking out loans over a longer period. Trading body UK Finance reported one in five first-time buyers in 2023 took out a mortgage of at least 35 years, compared to fewer than one in 10 in 2022.
GBP/USD: the past year
EUR: German balance of trade tomorrow
Bright and early tomorrow morning, investors will receive the latest figures for Germany’s trade surplus in January 2024. Markets forecast a reading of €23.6bn from €22.4bn in December 2023.
GBP/EUR: the past year
USD: A lot of weight on Powell’s testimony
On Friday this week, Federal Reserve chairman Jerome Powell is expected to remain hawkish. In his testimony, Powell may provide fresh insights on the timing of rate cuts.
