Sterling saw a recovery throughout the day yesterday versus both the euro and USD. This continued this morning as the pound has gained 1% against both currencies.
In the news, it’s been reported that over 40% of available mortgages have been withdrawn by lenders since Kwasi Kwarteng’s mini budget announced tax cuts last week.
Amid the bond market meltdown, the Bank of England has been carrying out gilt purchases, which are estimated to cost £65 billion, as well as temporarily delaying quantitative tightening in an attempt to stabilize the market, which it has temporarily.
Agnes Belaisch, Barings Investment Institute’s chief European strategist, said, “The market wouldn’t mind some stability, it has become a little bit unpredictable.”
There were no data releases of note in the UK yesterday, but this morning data showed the GDP annual growth rate was 4.4% year-on-year up to the second quarter of 2022. This is higher than the expected 2.9% rise.
Yesterday, Germany’s YoY inflation rate reached 10%, the highest on record and well above market expectations. As the largest economy in Europe, Germany’s consumer prices were up 1.9% in September in the wake of the eurozone’s energy crisis.
This morning, the French inflation rate dropped more than expected, going from 5.9% in August to 5.6% in September.
Key releases from the US are Personal Spending MoM AUG and Personal Income MoM AUG. There will also be six speeches due this afternoon from the Federal Reserve.
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