A frenetic week for data in the UK has been good news for the pound, which is now 2% up on the euro and 3% up on the US dollar compared to this time last month.
Overnight we have had the GfK Consumer Confidence reading, which was higher than expectations at -20 and showed a slightly improved outlook from the public on all five of its key measures. The majority of the public’s personal finances will have been improved by the interest rate cut two weeks ago.
However, while the GfK report found that most respondents said it was a “good time to save”, this has been somewhat undercut this morning by a leap in Retail Sales of 1.7% in January. Most of the rise was in food and drink sales, and there was bad news for ‘Dry January’, with a rise in alcohol bought in shops.
All the data this week has been supportive of sterling, with high pay awards, lower unemployment, higher inflation, more consuming spending and more confidence among consumers. The final top-level data release will come later this morning with the Purchasing Managers’ Index (PMI), a survey of business leaders conducting across all major economies. PMI has been declining in recent months across the eurozone in response to the threat of “Trump tariffs”.
Another big piece of news out this morning is the largest ever January budget surplus. The good news was that the Office for National Statistics estimates that the public sector was £14.5bn in surplus in January as tax receipts exceeded spending. The bad news is that this is still £5bn less than expected.
In business news, the FT reports this morning that the most expensive offices in the City of London are now renting at well over £100 per square foot. The rise comes amid a squeeze in supply of new buildings post-Covid, with notably fewer cranes visible from all the restaurants and wellness centres occupying the upper floors.
The Times reports that the British government is expected to work out a youth mobility deal with the European Union, allowing people aged 18 to 30 to spend up to three years working in the eurozone.
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