The pound fell against the euro on Monday as last week’s cocktail of bad economic news hung like a cloud over the British economy. A sleepy early-week economic schedule meant little could transform sterling’s fortunes, although there may be a chance for that later in the week with inflation and October’s retail sales report.
The euro was the main beneficiary of the calm in proceedings. The euro paired an almost 0.5% increase against the pound with a 0.3% advance over the US dollar. GBP/USD rose ever so slightly but the pound is languishing near its lowest level since early July against the US dollar.
After last week’s plunder, there was a modest weakness in the US dollar to begin the week – a development that will not have escaped its European rivals. Markets are treading carefully ahead of more key UK data this week as well as a slight increase in geopolitical friction. Over the weekend, outgoing US president Joe Biden authorised the use of US-made long-range missiles in Ukraine.
The Australian dollar was given a boost overnight on the publication of minutes from the Reserve Bank of Australia’s last meeting. Policymakers discussed the need for caution to ensure inflation was kept at bay, which could mean a period of interest rates being held “higher for longer”.
The G20 meeting in Brazil sharpened attention on the ongoing threat to global economies. The new situation in Ukraine is said to be high on the agenda while for Britain, Sir Keir Starmer’s meeting with China’s Xi Jinping represented a significant moment of political realism. It was the first time a British prime minister had met Xi since 2018.
In another sign of the close relationship between Donald Trump and Elon Musk, Tesla shares jumped by over 7% yesterday on report that the president-elect will consider changing self-driving vehicle regulations. That came after an altogether less encouraging moment for Musk last week, when his unveiling of the new “Cybercab” prototype led to shares falling by 9%.
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