Sterling has continued to strengthen against the euro, having gained well over 1% over the week to yet another strongest position since August 2022.
Against the US dollar, all of Thursday’s gains have now gone, but GBP/USD remains 2% up on this time last year.
The picture of falling US inflation continued yesterday with Producer Price Inflation dropping 0.2% in May – double expectations. Analysts now believe that the US Federal Reserve will start cutting interest rates in September.
The euro continues to struggle from the fallout from the European Parliament elections, together with last week’s cut in interest rates from the ECB, with another cut probable later in the year.
The focus now switches to the UK, with a busy week ahead, including inflation data, an interest rate decision from the Bank of England and retail sales.
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The idea that there will be an election upset are dwindling, with three weeks to go and even Conservative Party spokespeople warning of a Labour landslide. The focus is now on what Labour will actually do in power. Watch out for a detailed analysis of Labour’s plans on this site next week.
There is still plenty to fight for in the French general election, however, as President Macron challenges the far-right head on. Thus far it looks like a potential wipe out for his centrist alliance as the far-left is now also uniting against him.
In the meantime, both Macron and Rishi Sunak have been attending the G7 meeting in Puglia, Italy. The G7 agreed to use $50bn of Russian assets to help Ukraine’s war effort.
In business news, Wells Fargo bank in the USA has fired workers working from home for attempting to “create the impression of active work” through “simulation of keyboard activity”. It comes as other big banks including Barclays and Citigroup insist on a return to the office. Ironically, Zoom is among the tech companies also returning to the office.
Hopes of a resurgence in the UK housing market seem to have been dashed, with the RICS House Price Balance (a poll of surveyors’ hopes for property price rises) showing a marked downturn yesterday. Only surveyors in Scotland and Northern Ireland foresee rising prices. A report from Capital Economics also points to a flatlining property market, as hopes for an early rate cut were dashed in April and five-year fixed mortgage rates return to 5%-plus.
