Sterling weakened fractionally against the euro on Thursday while having an up-and-down sort of day against the US dollar. The biggest economic story of yesterday was the resurgence of the euro, which strengthened against all major currencies (albeit not by a great deal).
The US dollar has survived unscathed so far after a US presidential debate overnight where President Biden faltered alarmingly against Donald Trump. Democrats are said to be in panic mode after Biden appeared confused.
The British economy expanded 0.7% on quarter one of 2024, slightly higher than forecasts of 0.6%. This is the highest expansion in over two years for GDP, ending the recession the UK entered last year.
Yesterday, inflation in Australia rose to 4.4%, raising worries that maybe inflation isn’t defeated after all. Indeed, inflation expectations were also elevated in Europe, leading to a fall in the equities markets and then onto sterling. This morning, we will get much more detail on that with new inflation data from France, Italy and Spain.
The Bank of England pointed out yesterday that many householders on fixed mortgage deals have yet to feel the pain of higher interest rates. More than three million are still paying less than 3%.
A report from HMRC yesterday found there will be one million UK taxpayers paying the 45% top tax rate this year, due to fiscal drag. That is twice as many as three years ago.
Today is relatively quiet for European economic data, however, investors will receive the latest US PCE price index, personal income and personal spending figures this afternoon.
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