The pound has taken fright since Halloween, slipping by well over 0.5% since early on 1st November. It’s a signal that the currency markets are rowing back on optimism about a hawkish Bank of England approach to monetary stimulus at Thursday’s interest-rate-setting meeting.
With global leaders meeting in Glasgow, diplomacy appears to be in short supply, with leaders falling out over the AUKUS defence pact and Channel fishing, as well as the usual COP26 negotiations.
For the currency markets the bigger issue is interest rates, with both the US Federal Reserve FOMC and the Bank of England’s MPC making decisions on interest rates this week.
So far, the general mood appears to be that the Bank of England is looking less likely to raise rates early and The Fed more likely. However, worth noting that these are all just rumours and supposition until the announcements on Thursday and Wednesday respectively.
Elsewhere in the business news, manufacturers continue to be hit by supply chain problems across the world’s major economies, raising prices in response. In the UK, diesel prices hit their highest rates ever, beating 2012’s record of £147.93 by a penny on Sunday.
European stock markets and the FTSE have hit their highest levels since the pandemic started.
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