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The pound rose to a one-year high against the US dollar yesterday
The pound strengthened to a four-week high against the US dollar yesterday amid expectations the Federal Reserve could cut borrowing costs in September. The pound added around 0.2% yesterday, marking its eighth consecutive day of gains against the US dollar.
As investors continued to digest the results of the snap election in France, sterling made marginal gains against the euro. Against the US dollar, the euro fell on Monday morning following news of a hung parliament but regained its position throughout the day.
Over in Germany, exports fell for the first time since February, declining by 3.6% to a five-month low. This was primarily driven by a fall in exports to China, the UK and Russia.
US consumer inflation expectations for the year ahead declined for a second consecutive month in June, dropping to 3% from 3.2% in May. Expectations for the five years ahead also declined by 0.2 percentage points to 2.8%.
Jonathan Haskel, Bank of England policymaker spoke out about UK interest rates in a speech at Kings College yesterday. The economics professor said that despite “encouraging signs” of falling inflation, “I would rather hold rates.”
Whether fellow policymakers agree will be revealed at the Bank’s next meeting. Forecasts currently expect the rate to fall by 25 basis points to 5.0% on August 1.
Shares in pub company, Marston’s surged yesterday after it agreed for Carlsberg to buy out its part of a brewing joint venture for £206mn. Carlsberg has also agreed to buy Robinson’s drink maker, Britvic.
Today is relatively quiet in terms of economic data, with the only big event on the docket being Fed chair, Jerome Powell’s congressional testimony at 3pm (UK time). Investors will be listening out for signs of the Fed’s plans for the rest of the year.
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GBP: Retail sales fall
This morning, we heard that British retail sales fell by 0.5% year-on-year, reversing the 0.4% rise in May and missing expectations for a 0.2% gain. The British Retail Consortium suggested the cooler weather dulled consumer spending.
GBP/USD: the past year
EUR: French stocks plummet
French stocks suffered at political expense yesterday with the CAC 40 trading slightly down around 7,640. Investors continue to digest the shock result of a hung parliament as focus returns to who will govern France following a lack of majority for any party.
GBP/EUR: the past year
USD: Struggles for demand
After falling to multi-week lows against sterling, the US dollar looks to Federal Reserve chair, Jerome Powell’s congressional testimony, due this afternoon, for support and guidance.
EUR/USD: the past year
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