The pound gained a little against the euro and lost a little against the US dollar yesterday, as the quiet period for sterling continued.
There were bigger losses against the Japanese yen (with sterling down 0.75% yesterday, although it has picked up again today), but as one analyst pointed out yesterday, sterling’s volatility is close to a 30-year low.
Fortunately for those holding pounds, sterling’s lack of movement has been at a relatively strong level: 3% up on the euro compared to last March and 5% up on the US dollar.
Reasons for the lack of movement include a period of political stability and a ‘slack tide’ in interest rates across all the major economies, with no movement up or down in sight for another month or two at least.
The lack of high-level data has also been a factor. Yesterday car production numbers came in for the UK at a 21% year-on-year rise. However, there were warnings about the potential impact going forward of attacks on shipping in the Red Sea.
Mortgage approvals hit their highest level since the mini-Budget of late 2022, while the Bank of England pointed out that the ‘effective’ interest rate on new mortgages fell to 5.19% in January, a drop of 9 basis points. Following on from this, today we have heard from the Nationwide that house prices are on the rise again, after a year of falls. The building society said that prices were up 1.2% in the year to February but remain 3% below the all-time high set in summer 2022.
Speaking of the Bank of England, a new deputy governor has been announced, with Clare Lombardelli replacing Ben Broadbent. She will be moving over from the OECD but before that was at the UK Treasury and had worked at 10 Downing Street for David Cameron.
On the European side of the equation there was no shortage of data yesterday, with inflation falling to 2.9% in France, 2.8% in Spain and 2.5% in Germany. Later this morning we will get the overall rate in the eurozone, with 2.8% expected.
Next week the data takes a while to get going, but there is an interest rate decision from the European Central Bank on Thursday, albeit with no change expected.
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