Sterling begins a crucial week close to its strongest in a month against the euro. The Bank of England must make another interest rate decision on Thursday (30 April) and, after some economic data that pointed in opposing directions, the vote looks to be on a knife edge.
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Ongoing uncertainty around the energy shock will be the biggest factor for Andrew Bailey and his bank colleagues come Thursday lunchtime. Headline inflation increased to 3.3% in March, even as strong output from factories and retail indicated at least some resilience to higher fuel costs. After several years of gradual cuts, will we see another painful hike? It’s certainly possible, although the truth, as ever, is that nobody knows for certain.
The European Central Bank and the Federal Reserve will also announce interest rate decisions within 24 hours of the Bank. Both of those decisions could be close run things as well, so we may well see some sharp and unpredictable movements in key exchange rates between now and Friday.
Oil begins Monday well clear of $100 per barrel despite the three-week ceasefire and hopes of fresh talks in Pakistan. Brent crude climbed by more than 10% last week amid the US naval blockade of the Strait of Hormuz. Once again, diplomatic progress between the two sides looks to have been limited.
Another baffling period was summed up on Friday by a leaked Pentagon report which suggested the United States could remove its support for British sovereignty over the Falkland Islands. A gunman then stormed the White House Correspondents’ dinner in Washington DC over the weekend in an apparent attack on the Trump administration. In an awkward bit of scheduling, King Charles is set to begin a four-day state visit to the United States today to mark 250 years since the nation’s independence.
