After a string of blistering performances, the pound finally became reacquainted with reality on Wednesday afternoon. Sterling lost over half a cent against the US dollar and fell back from 21-month highs against the euro.
For its part, the euro also lost some value to the US dollar yesterday. That came after Germany’s inflation report for May and a slightly less positive mood in wider markets.
German headline inflation increased from 2.2% to 2.4% in May, the first month-on-month rise since February. That increase was in line with estimates from economists, and in a more encouraging sign, core inflation held steady at 3%. Energy costs fell despite the expiration of the German government’s ‘Preisbremse’ – or ‘price brake’ to you and me.
After remarks from Federal Reserve speakers earlier this week, it seems markets are once again becoming less confident of interest rate cuts, a twist nobody saw coming. With US stock markets weaker in response, the US dollar could benefit from some safe haven dynamics, assuming you haven’t already thrown your book of economic convention out the window.
In other news, Czech billionaire Daniel Křetínský has reached an agreement to buy the owner of Royal Mail in a deal worth £5.2bn. Křetínský promised to rejuvenate the service, although the deal is likely to be the focus of significant scrutiny as government ministers look to tread carefully.
Junior doctors in the UK have announced they plan to hold a strike during the election campaign. The British Medical Association (BMA) said that junior doctors will stage a full walkout from 7am on June 27 to 7am on July 2 unless the government returns to the negotiating table.
There’s little indication that Rishi Sunak is going to turn all Harold Wilson on us, though. The Prime Minster had a quieter day on the trail yesterday, while Keir Starmer sought to defuse the Diane Abbott situation. Stay tuned for plenty more election coverage in the coming weeks, with deep dives on how you can safeguard your budget amid the volatility.
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