Sterling fell to its weakest level since late November against the US dollar yesterday, dropping well over 1%.
While the pound also fell against the euro, some of those losses were recovered in the afternoon session and GBP/EUR remains slightly above where it started the year. This morning further losses in UK house prices is causing early jitters for sterling.
The big picture was really the greenback’s strength, rising decisively against GBP, EUR, CAD and AUD. This followed several news items showing support for the US economy, including positive signs for new jobs in the US, with private sector payrolls rising by 235,000 in December. The US trade deficit in November fell to its lowest level since September 2020. This has all led the US Federal Reserve to dampen expectations of an interest rate cut this year – more rises seem likely.
Tech firms were notably not offering good news on jobs, with Amazon axing 18,000 workers and Salesforce 8,000.
Business news in the UK included some positivity despite the week continuing with no effective rail service due to strikes. The retailer Next reporting better-than-expected profits from pre-Christmas trading, sausage-roll seller Greggs saw sales rise 18% like-for-like in December and Services PMI inched upwards. New car sales were less than expected but electric car sales were up.
The Department for Business, Energy and Industrial Strategy (Beis) said that almost £1bn of fraudulent or erroneous grants paid out in the pandemic are unlikely to be recovered.
On the political front, following PM Rishi Sunak’s keynote speech yesterday, his Labour opponent Sir Keir Starmer made his own. He cheekily co-opted the Brexit slogan ‘take back control’ in his promise to transfer power from Westminster to local communities.
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