Sterling enters the week on a stronger footing against both the euro and the dollar after a punishing start to the year so far. Despite its recent gains, the pound remains close to the one-month low touched against the dollar on January 3rd.
In the stock markets, equities in London performed well, extending gains for the fourth straight session on Friday. The benchmark FTSE 100 closed near record levels at approximately 7,700 points, which was largely driven by the heavyweight materials sector.
It is reported that the prime minister could look at a “one-off” payment for health workers, in the form of a hardship payment to assist them with the cost-of-living crisis this winter. Steve Barclay, the country’s health secretary, also suggests they could receive a bigger pay rise in April as part of the 2023-24 pay settlement.
Across the border and after a choppy week for the euro, the single currency enters this week stronger than the US dollar compared to this time 7 days ago. During Asian trading hours, markets saw the EUR/USD hit levels not far from its seven-month high at the end of December. This follows the latest inflation readings which revealed that price pressures eased more than expected.
On Friday, the eurozone’s annual inflation rate hit a four-month low, while Inflation also eased in Germany, France, Italy and Spain, as energy costs cooled.
Party secretary of the People’s Bank of China, Guo Shuqing said on Sunday that China’s economic growth is set for a quick rebound and will return to its “normal” path. This comes after the government launched its financial support initiative for households and private companies struggling to recover from the economic fallout of the Covid-19 pandemic.
In the US, Friday’s JOLTs data triggered fresh market doubts and this week, the dollar anxiously awaits America’s annual inflation rate.
Meanwhile, a slowdown in wage growth plus an unexpected contraction in services activity tempered expectations that the Federal Reserve will continue to hike rates aggressively. This is against the backdrop of Friday’s Nonfarm payrolls data, which revealed that the US added fewer jobs to its economy (223,000) in December.
According to forecasts from the US Federal Reserve, the labour market is set to remain tight in 2023.
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