Sterling is currently trading close to its highest level against the euro and US dollar since the early autumn, 2% to 3% stronger than the average for GBP/EUR and GBP/USD over the past year.
We’re in a busy period for high-level, market-moving data, and Friday’s announcement that UK GDP (gross domestic product) rose by 0.3% in November (reversing October’s 0.3% drop) helped the pound to consolidate recent gains.
Thursday’s US inflation figure – a small rise, against expectations – had made analysts doubt their predictions of early Federal Reserve interest rate reductions in 2024, but Friday’s PPI reading of future inflation expectations was down again and the dollar duly weakened.
The pound has been the most upbeat of the major currencies in the early part of 2024, relatively strong but with very little movement overall. Will that last? See what the ‘experts’ in the major banks are saying in our brand new, hot off the press Quarterly Forecast. Download it here.
But what of this week?
It starts quietly, with Americans enjoying a day off for Martin Luther King Jnr Day, and the UK suffering ‘blue Monday’ – supposedly the most depressing day of the year. We will shortly get a reading for Germany’s 2023 GDP, which is unlikely to offer much cheer, with an overall reduction in the size of the German economy of around 0.3% expected.
Tomorrow will be UK unemployment and earnings, with an annualised 6.8% (with bonuses) expected – way ahead of inflation. Wednesday, indeed, is the turn of UK inflation and a modest drop to around 3.8% is expected. On Friday we will hear retail sales for December.
In business news, the meeting of business leaders in Davos, Switzerland starts today. What was meant to be a focus on the business benefits of AI may well be hijacked by worries over attacks on shipping in the Red Sea, with supply lines again coming under threat, and oil prices.
In the UK the Post Office scandal shows no sign of abating, with executives from Fujitsu (the Japanese tech firm that installed the faulty software) being questioned by MPs this week.
Meanwhile, in the spirit of blue Monday, there is more bad news for the dying as the FT reports rising UK funeral costs. According to Sunlife insurance, the average traditional funeral cost with flowers and catering is up to a record high of £9,658 (although a more basic package is just over £4,000).
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