Following yesterday’s UK market closure, the pound soared to a two-month high against the euro in the early hours of this morning as traders continued to digest Friday’s retail sales data.
Against the US dollar, sterling rose to levels not seen since early March. The euro also strengthened against the US dollar, rising to a two-week high. Investor predictions for a European Central Bank rate cut next week increased following this movement.
Yesterday, the Ifo business climate indicator for Germany was steady, coming in at 89.3 in May, unchanged from April’s reading and considerably below forecasts of 90.4. The president of the Ifo, Clemens Fuest said, “Germany’s economy is working its way out of the crisis step by step.”
Germany’s wholesale prices dropped by 1.8% year-on-year in April, dropping from a revised 2.6% in March. On a monthly basis, wholesale prices increased by 0.4% in April.
In the UK, shop price inflation eased to the lowest level since 2021 after stores cut the prices of large items, such as furniture and TVs, as households continue to hold purse strings tightly amid cost-of-living pressures.
Prices rose at an annual rate of 0.6% in May, down from 0.8% in April according to the British Retail Consortium. On the other hand, food prices rose by 3.2% compared with 3.4% in April.
Last week, former model Susie Cave announced her luxury fashion brand, Vampire’s Wife was to close. Since then, industry insiders have speculated the collapse of platform, Matchesfashion, was a major factor in the supply chain implosion, not just for this brand but for others as well.
Fast-fashion retailer Shein is reportedly in talks to float on the London Stock Exchange after an attempt in New York fell against regulatory hurdles. However, senior UK politicians, including three parliamentary committee chairs have called for more scrutiny following allegations of labour malpractices.
This morning is quiet on the data front with a few speeches from Federal Reserve policymakers, however, tomorrow brings German consumer confidence and the German inflation rate for May, which is forecast to rise from 2.2% to 2.5%.
On Thursday, investors will receive US GDP growth rate estimates for quarter one of 2024.
Friday is especially busy on the data front, with May inflation rates for France, Italy and the euro area in the morning, followed by Canadian GDP for quarter one, and US personal spending and high-impact core PCE figures.
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