USD/GBP and EUR/GBP gained by around 0.3% and 0.4% respectively yesterday ahead of Wednesday’s UK inflation release. Sterling had enjoyed a strong end to last week after the Bank of England (BoE) suggested they shaded more hawkish on rates than other central banks.
Tomorrow will be a good day to put that theory to test. The UK’s inflation figures will be the subject of attention as markets look to gauge whether the BoE’s tightening cycle is feeding through to price dynamics.
It’s the eurozone’s turn today, however, with November’s final reads for headline, core and CPI due. The month-on-month headline rate is expected to be -0.5%, having registered 0.1% in October. The European Central Bank (ECB) has played its cards close to its chest up to this point, but pressure may grow should inflation figures continue to cool.
The Ifo business climate indicator for Germany fell unexpectedly to a three-month low of 86.4 in December’s survey, down from 87.2 in November. Sentiment worsened among manufacturers and in construction, while improving slightly among service providers.
In other markets, the Japanese yen gave up around 0.5% against the US dollar but remains almost 5% up this month. The yen’s strength reflects the growing belief that the Bank of Japan will soon decide to raise interest rates back into positive territory, just as the Federal Reserve starts to cut US lending rates.
The US homebuilders index rose in November, as the prospect of lower borrowing costs boosted confidence. The National Association of Home Builders/Wells Fargo Housing Market Index rose to a reading of 37, up from 34 in October, marking the first increase in four months.
The plot thickens in the PPE Medpro scandal. Former conservative peer Michelle Mone suggested the prime minister was aware of her involvement with the medical procurement firm from the outset, piling further pressure onto Rishi Sunak.
BP has halted oil and gas shipments through the Red Sea after withstanding raids from Houthi militants. The British oil major said it had paused shipping in the region indefinitely, citing a “deteriorating security situation” amid tensions in the Middle East.
Apple has been forced to suspend sales of its watch products after losing a patent case. A US judge found that its heart rate monitoring application infringed on a blood oxygen sensor owned by medical device maker Masimo, dealing the company a blow in the runup to Christmas.
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