The pound has yet to recover from last Thursday’s losses against the euro and US dollar following the interest rate decisions from the Bank of England (BoE) and European Central Bank (ECB). The ECB under Christine Lagarde is taking an exceptionally hawkish view on interest rates, while BoE rate-setters look to be toning down the anti-inflation stance in the light of more positive data on inflation in November.
Judging by Friday’s data from UK high streets – a fall in sales amid declining consumer confidence – the recent rate hikes seem to be having an effect already.
This week we will see more industrial action in the UK, with planned strikes from ambulance drivers, nurses, driving examiners and highway workers. Nurses in about a quarter of hospitals across England, Wales and Northern Ireland are walking out tomorrow in dispute of a pay rise above the RPI inflation rate, which is currently over 14%.
Over the weekend, prime minister Rishi Sunak revealed he plans to scrap the energy taskforce that Liz Truss set up just a few months ago. A government official said, “While it was sensible in September for the previous administration to explore these contracts, locking in long-term contracts while gas prices are this high just doesn’t make sense.”
Toward the end of the trading day on Friday, Wall Street stocks struggled to make headway. The fears are that Federal Reserve interest rate hikes are leading the world’s most influential economy into a recession.
Today is a rather quiet day on the data front with the only major release being Germany’s business climate.
In the US, the week ahead includes the PCE price index, personal income and spending, DC and consumer sentiment.
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