Sterling enjoyed a day of stability yesterday, continuing the theme of recent weeks, with marginal losses against USD and EUR in a quiet day of trading with the US enjoying a public holiday.
However, overnight the pound has weakened against the dollar by around 0.5%, as the world’s main safe haven currency benefits from a “risk off” nervousness in the light of ongoing trouble in the Middle East and the threat to the oil price and international trade.
This morning we have just had unemployment and earnings data from the UK, which showed earnings slowing more than expected, but unemployment at least getting no worse, at 4.2%.
Average earnings excluding bonuses rose by 6.6% in the year to November and 6.5% with bonuses.
Later this morning Andrew Bailey, governor of the Bank of England will be speaking.
Yesterday the German statistics agency Destatis said that Germany’s economy shrank by 0.3% in 2023, the only G7 nation likely to have shrunk according to most analysts, and with its first two-year recession since the financial crisis. Destatis blamed multiple crises (including inflation which has just been confirmed at 3.7% in December – up from 3.2% in November).
News of Germany’s GDP fall came as little surprise, however. More surprising was the surge in the eurozone’s balance of payments to a surplus of €20.3bn in November, from a deficit of €13bn in November 2022.
In business news yesterday, the Red Sea shipping issue continued, with Houthi missiles hitting a US ship.
Transport problems closer to home, too, with more rail strikes announced by the train drivers’ union ASLEF for later in January and February.
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