The pound’s eye-catching streak of daily advances resumed on Wednesday ahead of a crucial meeting of the European Central Bank (ECB). GBP/EUR climbed by a further 0.25% yesterday, meaning the pound is close to its strongest since the fateful Brexit referendum in 2016.
The US dollar emerged from the other side of November’s inflation report largely unscathed, holding firm against the pound and recording small gains over the euro. However, the stability of the present moment is now threatened by the prospect of a Federal Reserve rate cut. Some economists believe the data has opened the door to that next week.
On the face of it, headline inflation arriving as expected at 2.7% may not have been the most arresting news. Both headline and core inflation came in in line with forecasts, which was significant given the risk was that they came in higher than predicted. For these reasons, US markets are now increasing their expectations of one last rate cut before the Christmas break.
Staying in North America, the Bank of Canada’s decision to chop interest rates by a meaty 0.5% to 3.25% helped the Canadian dollar turn higher against its rivals. That marked the fifth time policymakers have cut borrowing costs this year and the scale of the cut underscored their commitment to igniting growth.
British business leaders arrived in Whitehall yesterday with a point to prove, much like the farmers who demonstrated on the lawns below. Executives from major firms like Natwest, BP and Aviva were in attendance as many warned of the significant impact of the chancellor’s budget on investment and recruitment.
With many people in the UK tightening their belts, holiday provider TUI raised its growth forecasts for next year as consumer seek out package breaks to control costs. 2025 bookings are currently “way ahead” of last year, with Greece, Turkey and the Balearic islands proving popular.
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