Sterling broadly strengthened over the course of yesterday, as global markets opted for a more optimistic outlook on China’s economy. However, that was reversed this morning against the euro following earnings data that has worried the markets.
However, the pound has continued to strengthen against the USD.
Employment and earnings data from the UK this morning offered a mixed picture, with a surge in new jobs (almost 300,000 new jobs in April being one of the highest monthly jumps on record) but earnings rising at far below inflation.
Against EUR, any positive options for Christine Lagarde, President of the European Central Bank, appear to be running out as she faces having to raise interest rates to beat inflation just when the eurozone faces a recession.
On that subject, one of the Bank of England’s interest rate setters, Sir Michael Saunders, struck a hawkish note in his last speech as a member of the BoE’s monetary Policy Committee (MPC), saying that he hoped interest rates would rise sooner rather than later. He said it was “not implausible that they would reach 2% by the end pf the year, from the current 1.25%.
This afternoon we will be hearing from the governor of the BoE himself, Andrew Bailey.
In the latest round of the Conservative leadership election, Rishi Sunak came out on top again, and as expected Tom Tugendhat was eliminated from the contest. The next round is this afternoon.
On the petrol forecourts, despite the weaker dollar pushing up oil prices, the AA has suggested that an average tank of petrol could cost £10 less by the end of July.
Elsewhere in the economy, both Deliveroo and Netflix have been suffering falls in revenue as the cost of living affects discretionary spending.
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 Personal Trader on 020 7898 0541 to get started.
