The pound continued through Monday much where it left Christmas Eve against both the euro and US dollar, albeit with a few wobbles.
However, this remains a strong rate by recent standards, with GBP/USD 2% up and GBP/EUR 0.5% up on this time last month. That leaves the pound to euro at its best since October and pound to US dollar at its best since September.
The main prompt was the lowering expectations of interest rate cuts early in the New Year. That will be decided on the data, and the next important data release on the UK side will be a shop inflation report from the British Retail Consortium in a week’s time. There was a report yesterday from the National Institute of Economic and Social Research that Chinese exporters – put off by high US tariffs – will instead divert cheap goods to the UK, potentially driving down inflation.
However, there is plenty still happening elsewhere, including some European countries’ inflation shortly today. And yesterday there was positive news on French unemployment, with initial jobless claims markedly down.
Also showing the impact of government action, the high-end estate agency Savills reports that the government’s new “mansion tax” was less bad than many had expected, causing luxury property price falls to moderate since the Budget. The strongest price growth, indeed, was in Chiswick, where £2m-plus family homes rose in price by some 1.3% in Q4.
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