Sterling seemed to take its cue from the unremittingly grim English weather yesterday, losing between a quarter and half a percent against leading pairs. This was despite good news on the economy from the Office for National Statistics first thing, with GDP (gross domestic product) up by 0.3% in November.
And this in itself was despite the Budget being delayed to late November having supposedly damaged the economy. The service sector got most of the credit, while car production ramped up after the late summer’s cyberattack. Nevertheless, sterling-euro is holding firmer than most and only a little off its recent four-month high.
The GDP result is likely to delay further interest rate cuts. The Bank of England’s next decision is in early February, so there is plenty more data to come, but so far this looks like just enough to keep the Bank happy on current rates.
A cut might have been good for the property market, but slipping out overnight was the RICS house price balance, a survey of chartered surveyors. In December they continued to be broadly pessimistic about the housing market – especially in London and the South East.
Looking at bigger numbers, yesterday Germany revealed its GDP growth for 2025 at 0.2%. This is about as anaemic as growth can be, but still a relief following two years of declines. The eurozone reported its trade balance narrowing to €9.9bn – quite a disappointment given a forecast of more than €15bn. And further worries for European business over Trump’s attempted takeover of Greenland. France’s finance minister met with his US counterpart Scott Bessent and warned of the effect on trade should Trump pursue this policy.
In business news, UK financial regulators have won a legal battle against some institutions such as Revolut, Visa and Mastercard which they say are overcharging fees on customers for cross-border transactions. Such fees have risen from 0.2% to 1.5% post pandemic and the regulator wishes to impose a cap.
And while restaurateurs, already beleaguered by higher business rates and national insurance, have also had to contend with the public taking appetite suppressant drugs, the drugs have brought good news for other sectors. A Wall Street bank has pointed out that airlines will save hundreds of millions of dollars each year as weight loss drugs such as Ozempic slim down passengers, meaning they will need 1.5% less fuel.
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