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Sterling heads into Wednesday up on the dollar and euro
The pound gained 0.6% against the euro and US dollar yesterday despite a lack of confidence in UK economic growth from the International Monetary Fund (IMF).
Financial agency, the IMF, yesterday revealed that the UK is set to be the second-worst performing economy in the G7. The new data outlined that the UK’s output is forecast to grow by 0.4% this year, faster than Germany which is set to shrink by 0.3%, but slower than the other five rival G7 countries.
On top of that, the IMF also raised its forecasts for the world economy, which it expects to expand by 3% in 2023. This is slightly higher than the 2.8% prediction outlined in the IMF’s April outlook.
Yesterday the UK was reported to be on track for incurring the highest debt interest costs in the developed world this year. The Treasury will spend £110 bn on debt interest in 2023 – an astonishing 10.4% of total government revenue – according to a forecast by Finch.
Cryptocurrency Worldcoin made headlines yesterday as it plans to offer users tokens for scanning their eyeballs. The idea behind it aims to use biometric verification to distinguish humans from AI systems.
A leading UK thinktank has found that top earners in London and the south-east masked real wage cuts across large swathes of the economy across the rest of the UK. This led to London’s real mean earnings increasing by 5% since February 2020, compared with a national increase of 2.7%.
US house prices fell for the third consecutive month in May to 1.7% year-on-year, according to the S&P CoreLogic Case-Shriller 20-city index. This matched April’s result, which marked the biggest decline since 2012. Ov
Overnight, the CEO of NatWest, Alison Rose, quit the company after admitting a “serious error of judgement” regarding the handling of Nigel Farage’s account closure.
Today the spotlight is on the Federal Reserve, which is due to announce its latest interest rate at 7 pm (UK time). The rate is currently at 5.25% but economists forecast a 25-basis point rise, which they believe will be enough to control inflation.
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GBP: manufacturing business optimism soars
The Confederation of British Industry’s quarterly gauge of manufacturing optimism in the UK improved to +6 in Q3 of 2023 from -2 in the previous period.
GBP/USD: the past year
EUR: German business confidence falls
The Ifo business climate indicator for Germany fell for the third consecutive month to 87.3 in July, representing an 8-month low. This suggests inflationary pressures are weighing down on the economy.
USD: Dollar index extends gains
The dollar index extended gains for the sixth consecutive session to 101.5 on Tuesday. The index hasn’t seen this level in just over two weeks as traders cautiously await the Federal Reserve’s interest rate decision later today.
Against the Japanese yen, the US dollar retreated from its weekly high yesterday as traders brace for the interest rate decision, however, isn’t far off Friday’s high.
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