The euro lost out to sterling yesterday but gained on the US dollar, after the European Central Bank (ECB) kept interest rates on hold – as expected – and said that inflation was falling faster than forecast.
While GBP/EUR strengthened for a while, it didn’t last. However, sterling climbed to its strongest level against the US dollar for several weeks and has remained there.
From the ECB yesterday the new eurozone inflation projection is an average of 2.3% in 2024, falling to 2% in 2025 and 1.9% in 2026, with core inflation only fractionally higher than that.
In the UK, the Halifax house price index slipped back to 0.4% month-on-month, or 1.7% for the year.
Unlike some years, when the budget falls apart spectacularly over the following days, Jeremy Hunt’s spring budget has held together, albeit with the chancellor being labelled the ‘fiscal drag queen” for failing to raise tax thresholds yet again. British retirees will have realised they are losing out on tax cuts, since they do not pay National Insurance Contributions, with the average over-66 losing £840, while those aged 18 to 45 gain £590.
The IMF has said that the UK will need more tax rises to stabilise UK debt, which the Institute for Fiscal Studies (IFS) warning that the next chancellor faces the hardest task of any since the end of WW2.
In US politics, President Biden came out fighting in the State of the Union address last night, hailing an “American comeback” in the economy and sparring with opposition politicians.
And showing that age is no barrier to optimism, 92-year-old Rupert Murdoch announced his engagement to what will be his sixth wife, a 67-year-old Russian scientist.
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