Sterling enjoyed a positive start to the week, the only red in a sea of green being a 0.65% drop against a bouncing back Australian dollar. There were modest gains against the euro, US dollar and Swiss franc.
However, markets were all a little flat, with the only excitement coming from the recovering Aussie dollar and a falling Japanese yen.
The Royal Bank of Australia has just opted to keep interest rates unchanged at 4.35%. It’s now been over a year since policymakers changed the headline rate, reflecting their unease over persistent underlying inflation in the Australian economy.
Commodity-backed currencies like the AUD, plus NOK and NZD, are also benefiting from the Chinese Communist Party changing direction towards a “moderately loose” monetary policy in 2025.
Back in Europe, Thursday sees an interest rate decision from the European Central Bank (ECB). With their decisions well sign-posted in advance, a 25-basis point cut is expected on Thursday.
UK chancellor Rachel Reeves was talking to the group of European finance ministers yesterday – the first chancellor to meet the Eurogroup since Brexit – pledging closer ties. She said that negotiations would start in the new year, but did not rule out “dynamic alignment” with EU rules to make farm, food and goods exports easier, without joining the single market.
Meanwhile, prime minister Sir Keir Starmer was in Saudi Arabia, hoping to sign a trade deal worth billions with the GCC (the Gulf Co-operation Council) that also comprises the UAE, Qatar, Kuwait, Oman and Bahrain.
His meetings were slightly overshadowed by the images coming from Syria and the fall of the Assad regime.
The world waits to see what the larger impact of events in Syria will be, but for now it has taken interest away from other geopolitical tensions but failed to offer much support to the safe haven US dollar.
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