020 7898 0500The pound continued to climb against the euro yesterday following political uncertainty in France. Despite falling slightly towards the end of Tuesday, sterling remains over 1% higher than this time last week.
The British economy stalled in April 2024, in line with market expectations and after a 0.4% rise in March. It is the weakest performance in four months and was largely impacted by a fall in industrial output and construction.
Yesterday, the NFIB reported on renewed optimism for small businesses in the US as the rate rose to 90.5 in May 2024, beating forecasts of 89.8. While sentiment improved to a five-month high, 22% of small business owners reported that inflation was their single most important problem in daily operations.
Following UK unemployment data, rumours circulated as investors expect the Bank of England to hold interest rates until the level of pay increases eases. In the three months to April, average earnings (including bonuses) held steady at 5.9%.
In the news, two former directors of department store chain, BHS, have been ordered to pay at least £18 million over wrongful trading. This comes eight years after the retailer fell into administration.
The World Bank warned, in its half-yearly global economic prospects, that the model of international cooperation that allowed poorer countries to narrow the gap between them and the wealthiest countries had fractured.
For the US dollar, there wasn’t much to report yesterday due to a lack of market-moving data. However, that could all change this afternoon as a flurry of economic releases are expected which will include core inflation and an interest rate decision from the Federal Reserve.
Markets forecast the American central bank to hold rates at 5.5% tomorrow, where they’ve remained since June 2023.
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GBP: British economy flatlined in April
The Office for National Statistics said monthly growth in April flatlined after a 0.4% increase in March. The economy was unable to maintain its momentum due to the weight of the struggling retail sector, a downturn in manufacturing and a drop in construction output.
GBP/USD: the past year
EUR: European stocks slide
Political turmoil in France saw European stocks extend their losses for a third consecutive session on Tuesday. The Stoxx 50 and the Stoxx 600 lost around 1% following French president, Emmanuel Macron’s decision to call a snap election.
GBP/EUR: the past year
USD: Upcoming data
This afternoon, the Federal Reserve is expected to keep the fed funds target range steady at 5.25-5.5% for a seventh consecutive meeting in June 2024. Other data this afternoon will include US headline inflation, which is expected to hold steady at 3.4% in May, matching April’s rate.
USD/EUR: the past year
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