Sterling was on the move yesterday, clawing back some of Tuesday’s losses ahead of the Bank of England’s interest rate decision today. That movement was fuelled by high services inflation, which reduced the likelihood of imminent rate cuts.
The pound climbed by around a quarter of a per cent against the euro and the US dollar. EUR/USD was little changed on the day, with any significant flows limited due to the US federal holiday.
Headline inflation in the UK fell to its lowest level since 2021 in May. That is unlikely to influence the Bank today, however, with most analysts predicting that the combination of the upcoming election and stubborn services prices would lead to another hold.
The European Commission issued a stern warning to France about its government debt levels. Just weeks before France goes to the polls, the Commission said that French sovereign debt was forecast to swell to almost 114% of GDP by the end of 2025, while also pointing to high levels of government deficit in Belgium, Italy and Poland.
Tech giant Nvidia soared past giants like Apple, Tesla and Microsoft this week to become the most valuable company in the world. That came after its stock price rose by 4% yesterday, taking its market capitalisation to an eye-watering $3.35trn. For context, that makes it roughly the same size as the entire UK economy.
US markets took a well-earned breather for the Juneteenth holiday yesterday. Things quickly pick up again on that side of the Atlantic, with preliminary building permits for May due this afternoon.
Before the break, several Federal Reserve speakers gave comments on Tuesday evening. In a fashion that might serve as a useful template for some politicians in coming weeks, policymakers stuck to a disciplined party line of caution, which helped to dampen any hopes of movement on the interest rate front.
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