Thursday was a wild day on the currency markets, with the pound strengthening by nearly 3% on the US dollar and well over 1% on the euro.
Most of that gain was in the hour after America’s ‘core inflation rate’ was revealed to be lower than expected at 6.3% year on year against an expectation of 6.7%. The monthly rise was 0.3% against an expectation of 0.7%. This is the inflation rate without food and energy taken into consideration, which the US Federal Reserve interest-rate setters favour. The wider ranging rate that does include those was also below expectations at 7.7%, its lowest since January.
That led to a general surge in US stocks and a sell-off of dollars as investors foresee a slower pace of interest rate rises ahead from The Fed.
This morning the UK’s GDP for September has come in at a drop of 0.6%, suggesting that the UK could be in a recession already. However, the year-on-year figure of 2.4% growth remains slightly ahead of expectations. This is a preliminary reading, and it could change as more data comes in.
Elsewhere in the business news, the world of crypto has come under pressure, with a crisis at FTX Trading, a crypto currency exchange, as investors attempted to withdraw $5bn.
Trouble at two other tech/proptech firms, with both Meta and WeWork laying off significant numbers of staff.
Next week looks likely to be another rollercoaster, with several top-level data releases in the UK, as well as chancellor Jeremy Hunt’s UK Fiscal Statement on Thursday.
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