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The dollar is on the rise
Sterling made a bit of a recovery yesterday against the euro, by close to a quarter of a percent, though it lost a similar amount to the US dollar, reaching yet another six-month low.
Indeed, it was the dollar’s day, powered upwards by hopes of an interest rate hike at the Federal Reserve’s 1st November meeting.
In terms of data, there was positivity for the UK with CBI Distributive Trades coming in at -14, a sharp improvement from the near-record-breaking -44 last month, but still a fall, and for the fifth month running.
There were also speeches from several of the European Central Bank’s interest rate setters including Christine Lagarde, president of the ECB. She saw evidence of a slowdown in the eurozone: “Lower demand for euro area exports and the impact of tight financing conditions are dampening growth, including through lower residential and business investment. The services sector, which had been resilient until recently, is now also weakening.” No wonder the single currency suffered, losing between 0.25% and 0.75% against major rivals.
In business news, a report has found that London offices are worth nearly a fifth less than this time last year, the worst drop in major European office markets apart from Amsterdam.
Amazon is investing $4bn in an attempt to compete with ChatGBT, putting the money into Anthropic.
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GBP: Pound in reactive mode
The pound had a mixed day, but did at least show some signs of recovery after a torrid week that has seen losses of between 1 and 2% against the next few most traded currencies.
However, with little on the docket apart from a marginally less bad result for CBI Distributive Trades, it was data and comment from the EU and US side that moved the dials.
It’s not a busy day for data, but we will get car production data in the evening.
GBP/USD past year
EUR: Eurozone economy weakening – Lagarde
The euro lost across the board yesterday following the head of the European Central Bank warning about the declining state of the EU economy.
The data that did come out was much as expected, including the Ifo Business Climate for Germany, slightly better than expected at 85.7. Tomorrow we will hear from the other side of the sales counter, with GfK Consumer Confidence, and then on Thursday there will be a mass of data to get through.
USD: New six-month high
The US dollar hit yet another six-month high against the pound and euro yesterday, as the markets, and gilts, reacted to the belief that interest rates will soon be on the move upwards again.
We’ll get some property market data out this afternoon, with the S&P Home price Index, as well as that from the Federal Housing Finance Agency and Building Permits too. Evidence of a housing market on the skids put potentially hit the value of the dollar.
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