After a relatively quiet day on Friday, the pound is approaching the end of January approximately 2.3% higher against the US dollar and 0.6% higher against the euro on December 2022 rates.
While it’s been a rocky month for the euro against the US dollar, it approaches February over 2% higher than it was at year-end just a month ago.
On Friday morning, chancellor Jeremy Hunt said, “the best tax cut right now is a cut in inflation.” He followed this comment by saying the UK government will look to cut taxes only, “when the time is right.”
Towards the end of last week, the new chief executive of Rolls-Royce, Tufan Erginbilgic told staff the company is a “burning platform” that must transform to survive. Erginbilgic is expected to announce a sweeping restructuring plan for the FTSE 100 company which had its market value fall by two-thirds in the last five years.
In Europe, natural gas prices fell to below €55/mWh, extending the weekly loss to 20%. This price is close to levels last seen in September 2021, over 16 months ago.
Personal spending in the US fell 0.2% in December 2022, more than economists’ expectations of 0.1%. Personal income went up 0.2% however, the least increase we’ve seen since April 2022.
This morning Spain inflation rate rose to 5.8% in January, up from a 13-month low of 5.7% in December 2022.
Later today, markets will hear GDP Growth rate for Germany, which is expected to fall year-on-year from 1.2% to 1.3%. This will be shortly followed by economic sentiment for the euro area at 11am.
This week, the world’s central banks are tipped to raise interest rates. The Federal Reserve is forecast to raise interest rates 25 basis points to 4.75%.
The Bank of England and European Central Bank are both expected to raise rates by 50 basis points to 4% and 3%. If increased to 4%, this will mark a 10th consecutive rise for the Bank of England.
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