It was a mildly frantic end to the month for sterling against the euro, with the markets eyeing Thursday’s interest rate decision from the Bank of England. The day ended with sterling slightly higher against the euro but down on the US dollar.
On the data front it was a big day for Europe, with a mass of data landing (see the euro section), including inflation and GDP, which essentially was supportive of the ECB’s recent monetary policy decisions as growth rose even as inflation fell (although core inflation remains a concern).
It will be a little quieter today, but we will shortly hear eurozone unemployment and see if all that inflation reduction has come at a cost of jobs, or whether, as appears to be the case in the USA, the ECB can engineer a soft landing, or so-called “immaculate disinflation”, where inflation is brought under control without damaging the labour or housing markets.
For the UK, the British appetite for credit continues undiminished, with mortgage approvals and consumer credit growing at their fastest pace for five years. Net mortgage approvals rose to 54,700 in June, against an expectation of just 49,000.
There are fresh hope for inflation, with a slowdown for food prices and discountng by clothes retailers in July, leading to shop price inflation dropping from 8.4% to 7.6%.
In UK politics, PM Rishi Sunak has defended a decision to grant more than 100 new North Sea oil and gas extraction licences as he continues to open up policy differences with the Labour party.
The UK’s financial regulator the FCA has warned banks that if they fail to pass on higher interest rates to savers they will face “robust action”. On average, the biggest savings providers passed on just 28% of base rate rises to their easy access accounts since the start of 2022, said the FCA, but they “will be required to justify by the end of August how those rates offer fair value” or face action.
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