Sterling’s position drifted yesterday against some currencies as the excitement of Tuesday’s excellent services PMI reading dissipated. However, GBP/EUR has stayed strong and there was more positivity for British business with the CBI Distributive Trades Survey surging 25 points to +2, as retail sales recovered even if retail jobs continue to be lost.
It’s been a busy morning for data so far. We have heard the GfK Consumer Confidence survey result for the UK, which showed the biggest improvement in two years, rising to -38, and for Germany, which was -30.5. The difference was that less had been expected of the UK and more of Germany. Spanish producer prices have fallen sharply and French consumer confidence is up.
Yesterday one of the Bank of England’s policymakers Catherine Mann was speaking, repeating her hawkish stance – “We have an inflation problem. That’s the bottom line” – and pointing out that inflation is still way above 2%, the BoE’s target rate. She is still for raising interest rates “sooner rather than later”.
However, City of London economists at Pantheon Macroeconomics and Citigroup forecast inflation to be at 2% by the end of the year, far below the BoE’s own prediction of 4% by Christmas.
In business news, British Airway’s owner IAG has posted a profit of £1.3bn, recovering from losses of more than twice that amount in 2021, while Heathrow Airport’s losses halved to £684m. Passenger numbers in 2022 remained 25% down on 2019, however.
In strike news, London Tube drivers are striking for more pay on 15th March and RMT workers on 16th, 18th and 30th March.
Well publicised food shortages continued in the high street, with salad items failing to arrive from overseas due to poor harvests, exacerbated by problems with UK greenhouse crops. The UK secretary of state responsible, Thérèse Coffey, suggested it was time that British shoppers cherished locally grown seasonal crops such as turnips. (Several farmers pointed out that they had no-one to harvest the turnips since Brexit).
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