The euro made modest gains in yesterday’s session, adding 0.4% against the US dollar and around half that against the pound. GBP/USD rose by around a third of a per cent although there was an absence of punchy macro evidence to back up the swing.
The euro’s climb followed some pessimistic comments on the European economy’s outlook from European Central Bank (ECB) vice president Luis de Guindos. De Guindos said that last year’s rapid disinflation would likely slow over 2024 and the economy could be contracting by Christmas.
It may be a little soon to be thinking of the next festive period, but his comments will probably quell excitement that the ECB will be thinking of interest rate cuts soon. More detail should follow in the publication of this morning’s European economic bulletin.
Anyone watching Bank of England (BoE) governor Andrew Bailey’s remarks to MPs yesterday may have hoped for similarly illuminating comments. Instead, Bailey mostly stuck to rope-a-dope tactics, saying that higher interest rates had not destabilised the financial sector but risks remained from geopolitical uncertainty.
Markets may demand a clearer path to rate cuts in the near future, but for now, Bailey was happy to play his cards close to his chest.
It’s a big day in the US with inflation and initial jobless claims set to arrive. While the dial isn’t expected to have moved too much, core inflation may have dipped beneath the symbolically significant 4% mark in December, having been as high as 7% in the back end of 2022.
Our latest Quarterly Forecast covering the three months from January to March arrives today. Don’t be shy to secure your copy – the report is free to download and contains expert Q1 predictions as well as what’s in store for major global currencies in 2024.
Government debt yields fell yesterday across auctions for UK (gilt), German (Bund) and US (treasury) government bonds. The price of sovereign debt moves in inverse correlation to its yield, reflecting a slightly increased confidence in the economic landscape.
After years of spiralling costs, the latest estimate for the London–Birmingham leg of the HS2 high-speed rail project is now £67bn. Sir Jon Thompson, chair of HS2, told MPs on Wednesday that was the official estimate for what remains of the controversial scheme in current prices.
UK alcohol manufacturing Brewdog has backpaddled on its pledge to pay all staff a living wage, which would require a £1 increase from the current hourly rate. New staff will instead be paid at the legal minimum wage, a move that prompted criticism from staff and employment charities.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Account Manager on 020 7898 0541 to get started.
