The pound’s long slow recovery against the euro continued yesterday, reaching a three-week high, while a drop against the US dollar mid-morning righted itself by the end of the day.
There were no major data releases yesterday, or today, but there will be several speeches by central bankers, including Christine Lagarde, president of the European Central Bank (ECB), as well as some of the US Federal Reserve’s interest rate setters.
The IMF and World Bank are meeting this week in Morocco, in the shadow of the greatest sell off of government bonds in decades, leading to higher borrowing costs for governments.
Before that, Bank of England policymaker Catherine Mann was relatively hawkish in comments yesterday, saying that monetary policy: “has to be more aggressive because it has to address both a drift in expectations as well as the actual inflation”. While this will have surprised no-one, it suggests that interest rate rises may not be done with yet.
In the markets, the effects of the atrocities in Israel and their aftermath as the battle is taken to Hamas are beginning to be felt in rising gas and oil prices and falling share prices for airlines. It also caused a reversal, or at least a blip, in the sell-off of government bonds as investors looked for safe havens.
The Israeli shekel (ILS) fell to its lowest level in seven years against the dollar and five years against sterling.
In the business news, a survey from accountancy firm BDO found that companies’ hiring intentions are at their lowest for a decade. Its employment index has fallen for the third month in a row.
In politics, shadow chancellor of the exchequer Rachel Reeves was speaking at the Labour Party Conference in Liverpool. The former Bank of England economist promised fiscal discipline, saying “You cannot tax and spend your way to economic growth.” She also coined the word “securonomics”, promising a new deal between private and public finance and a safer pair of hands on the economy.
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