Sterling rose steadily on Tuesday against its transatlantic rival, as for once it was the US dollar’s turn to occupy the hot seat.
Although new data pointed to growth in the American economy, high-profile comments on inflation and the US government deficit dragged the US dollar down. GBP/USD gained three quarters of a cent yesterday, while EUR/USD rose by a quarter of a cent. The pound was little changed against the euro.
We got the rare sight of Jerome Powell and Christine Lagarde sharing the same stage yesterday, where Powell acknowledged that ‘really good progress’ had been made against inflation. In a major panel event at the European Central Bank (ECB) symposium, Powell said (rather reluctantly, it must be noted) that prices appear to be falling again.
For those in American markets who weren’t immediately engulfed by glee with his observations, there was a more ominous detail that followed. In Powell’s opinion, the current US budget deficit was ‘unsustainable’ and needs to be addressed.
Those comments came shortly before US JOLTs job openings figures for May. While slightly drowned out by Powell, there was a minor shock as the number of job openings came in more than 200k higher than expected and easily beating April’s total.
Eurozone inflation fell to 2.5% in June from 2.6% the month prior, although services inflation remained elevated. Despite German inflation also falling in June, analysts believe it is unlikely that these figures will convince the European Central Bank (ECB) to cut interest rates for the second meeting in a row later this month.
Marine Le Pen yesterday promised that her far right RN party would look to form a government even if it fell short of an outright parliamentary majority. That came after Macron’s centrist allies and left-wing parties appeared to move closer to a deal that would ensure the tactical withdrawal of candidates from Sunday’s second ballot.
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