It was day of mixed fortunes for sterling yesterday, a small rise against the euro and a sharp fall against most other currencies.
The reason for its successful afternoon session against the euro was not so much the European Central Bank’s (ECB’s) decision to raise interest rates by a quarter of a percent to 4.5%, but its signalling that this would be the last rise for the time being. Considerations that the Bank of England could follow suit on Thursday may have hit sterling.
This is now the highest that the eurozone’s interest rate has ever been, and the tenth consecutive rate hike, but the single currency declined against all of its major rivals by between 0.3% (GBP) and 1.3% (AUD). There will be keen interest in ECB chief Christine Lagarde’s speech later this morning.
In business news, the flotation of Arm, the Cambridge-based tech firm, in New York was a resounding success, with shares rising by 25%.
The Chinese government has hit back at the European Commission’s investigation into China’s electric car subsidies, which could result in severe tariffs on Chinese EVs arriving in Europe, if the EU finds evidence of illegal subsidies. China’s ministry of commerce said: “China will pay close attention to the EU’s protectionist tendencies and follow-up actions, and firmly safeguard the legitimate rights and interests of Chinese companies.”
Meanwhile, there was positive news on the Chinese economy this morning, with industrial production, retail sales and employment levels all better than expectations. Two rounds of interest rate cuts this summer will have helped, but as the New York Times notes: “The broad troubles of China’s real estate sector continue to cast a long shadow over the country’s economic prospects.”
In France, a supermarket has begun naming and shaming those food suppliers seeking to boost their profits by ‘shrinkflation’. Carrefour will label products that have been shrunk in pack size, including those from Nestlé, PepsiCo and Unilever.
While French supermarkets appear to be acting in consumers’ interests, in UK shops consumer champion Which? reports that Sainsbury’s and Tesco are pulling a fast one on loyalty card holders, inflating prices just so they can appear to reduce them for cardholders.
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