The pound struggled to maintain Tuesday’s strength against the euro yesterday as it plummeted close to 0.75%. It was a different story for the pound-to-US-dollar rate, however, as sterling gained a further 0.73% on Wednesday, surpassing Tuesday’s 15-month high.
Yesterday economists heard the US inflation rate decreased to 3% in June – a two-year low – raising hopes that the economy is positively reacting to the US Federal Reserve’s (Fed’s) rapid rate hikes.
The cooler-than-expected inflation data influenced movement on the US stock market. The Dow Jones gained 0.8% while the S&P and Nasdaq gained 0.9% and 1.2%, respectively.
Multinational bank Barclays appealed to the Supreme Court yesterday after it faced a compensation claim from a customer who was tricked into sending their life savings (£700,000) into a fraudster’s account overseas. Judge Leggatt ruled in the bank’s favour on Wednesday, stating that banks cannot be held responsible for fraudulent payments that are authorised by customers.
The European Central Bank and the Bank of England (BoE) announced their intention to maintain a hawkish monetary policy, meaning they are in favour of further interest rate rises to fight rising inflation.
The BoE is aware that the economic impact of its 18-month rate hike campaign is yet to be fully felt in the UK, which may be detrimental to employment and economic growth.
More worryingly for the British central bank, consumer price inflation in the UK remained at 8.7% in May, down from a high of 11.1% in October but the highest among G7 economies.
China’s trade surplus fell to $70.62bn from $97.41 in June, as exports dropped more than imports following reports the economy was at risk of deflation. This is the steepest drop since February 2020 and worse off than the forecasted 9.5% fall.
This morning, figures revealed the British economy contracted 0.1% month-over-month in May, compared to market expectations of a 0.3% decline. The Office for National Statistics said a figure better than a 0.1% drop would put the economy on track to avoid an overall contraction for quarter two of 2023.
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