Despite soaring in the wake of the Italian government’s decision to impose a 40% windfall tax, the pound ended yesterday in negative territory against the euro due to a lack of UK data. This decline has continued this morning with sterling losing 0.4% against the euro.
The pound’s poor performance could also be credited to comments from thinktank, the National Institute of Economic and Social Research (NISER) which said it would take until the third quarter of 2024 for UK output to return to its pre-pandemic peak. It also said that there was a 60% risk of the government going to the polls during a recession.
The pound remains largely unchanged against the US dollar but has lost almost 1% since last month.
Shares in WeWork, a shared office space-sharing company that thrived post-pandemic, fell 23.7% in after-hours trading in New York on Tuesday. The company has “substantial” doubts about its ability to keep running.
Budget UK retailer, Wilko has stopped offering home deliveries online as it holds last-minute talks on a potential rescue deal. This comes after the retailer warned it was on the brink of collapse last week, which would put more than 12,000 jobs at risk.
The Chinese economy fell into deflation yesterday as consumer prices fell year on year in July for the first time in several years. The CPI index fell 0.3 points last month, after flatlining in June. Economists had expected a 0.4% year-on-year decline.
US mortgage rates for 30-year fixed-rate contracts jumped 16 basis points to 7.09% in the first week of August. This matches levels not seen since November 2022.
Ahead of US consumer price index (CPI) figures, which are due today, US stocks were little changed as investors held off on making big bets ahead of the inflation report. Tomorrow, markets expect the core inflation rate year-on-year to remain unchanged at 4.8%, the lowest since October 2021.
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