Sterling ended last week on a high against the US dollar, reaching levels not seen since March 2022, and held its position yesterday. This movement came following comments from Jerome Powell, chair of the Federal Reserve, who said “the time has come” for an interest rate cut.
Powell’s comments came at the US central bank’s annual conference at Jackson Hole, Wyoming. However, the Fed chair did not specify when rate cuts are expected or how large they might be.
Bank of England governor, Andrew Bailey, noted on Friday that more interest rate cuts may be on the way for the British central bank to help mortgage holders as inflation is becoming less problematic.
Yesterday German investors found the Ifo business climate indicator dropped to 86.6 in August, the lowest level since February. While this reading showed a decline, the result was stronger than expected.
US durable goods orders surged by 9.9% in July, making up for June’s revised decline of 6.9%. The result challenged the spike in pessimism over business activity, suggesting the current slowdown may be temporary.
Looking at the economic docket, here’s what to look out for this week…
This afternoon, prime minister, Sir Keir Starmer is set to speak at Downing Street about the riots across the UK this summer and is expected to reveal how his government will “root out 14 years of rot” following Conservative leadership.
Tomorrow, investors will hear the latest GfK consumer confidence for Germany, followed by its preliminary inflation rate on Thursday which is forecast to fall slightly from 2.3% to 2.2%.
Friday is the busiest day of the week, with mass inflation data for the euro area, France and Italy. At the same time, the afternoon will be dominated by US personal spending and income stats along with the latest core PCE price index results.
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