In the absence of any serious data releases or political events this week, sterling, largely on the backfoot since the interest rate decisions in mid-December, has been left to swing in the wind. The Christmas period saw some rapid rises and falls against both the euro and US dollar but the year ends with sterling down but not out.
House prices in the UK are also falling, but not catastrophically. This morning the Nationwide Building Society noted that UK house prices fell by 0.1% in December. This is the fourth seasonally adjusted fall in prices – the worst run since 2008 – but is significantly less of a fall than expected.
That’s not the only price falling – the cost of gas in Europe fell to below pre-Ukraine war levels yesterday. This helped to support the euro yesterday, but the gains against the pound and dollar were minor.
The last significant data release of the year on the European side is Spanish inflation, below expectations in December at 5.8% year on year. That’s a nice bonus for UK retirees in Spain, who will get a pension rise in line with UK inflation of nearly double that.
This is not the picture everywhere in Europe. The Baltic states are seeing inflation in excess of 20%. That’s putting pressure on European Central Bank interest-rate setters to maintain a hawkish approach on interest rates.
Elsewhere in the business news, several countries including the US, Japan and India are imposing Covid testing on arrivals from China. The UK and parts of the EU may follow.
Profits for US corporations have dropped as they suck up rising costs without passing higher prices on to consumers, according to data from Wall Street. Net profits this quarter look likely to have dropped from 11.9% in Q3 to 11.6% in Q4.
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