Sterling traded blows with the euro on Wednesday as the German government announced the unwelcome news that it had revised down its full-year growth forecasts.
GBP/USD briefly fell to its lowest since early September ahead of today’s crucial US inflation release. The euro meanwhile dipped to its lowest in two months against the US dollar as it laboured under a similar dynamic.
Last night’s FOMC minutes from the Federal Reserve added more fuel to the interest rate fire. A “substantial majority” of committee members were in favour of the bumper 0.5% cut to borrowing costs last month. With headline consumer price inflation set to fall to 2.3% in September, we must now wait to see if a surprise on that front blows the prevailing narrative off course.
The German government downgraded its economic projections and now expects the economy to contract in 2024 before rebounding next year. The prospect of the first multi-year recession since the early 2000s is a bitter bill to swallow for a country that is battling interest rates, depressed consumer mood and political instability. The federal government does forecast the economy to grow by 1.1% and 1.6% in 2025 and 2026 respectively.
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New guidance from the trade body the Investment Association allows UK-listed companies greater scope to pay senior figures higher salaries. A press release issued yesterday argued these new guidelines would encourage greater competition with the American market.
Argentine prime minister Javier Milei has said the time is not right to lift the country’s currency controls. Since taking power, Milei has attempted to artificially protect the Argentine peso under a series of protocols first introduced in 2019 by a previous government.
Joe Biden spoke with Israeli prime minister Benjamin Natanyahu yesterday in an effort to calm rising tensions in the Middle East. Biden is said to have urged his counterpart not to attack Iranian nuclear facilities in retaliation for last week’s missile strikes.
As Hurricane Milton arrives on Florida, millions of residents have been forced to leave their homes and evacuate to neighbouring states. The economic impact is set to be massive with the National Hurricane Center warning it could be “one of the most destructive hurricanes on record for west-central Florida”.
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