After its boost against both the euro and dollar on Monday, sterling relinquished gains made against the euro towards the end of the business day. Against the dollar however, the pound has maintained yesterday’s gains and is still stronger than the greenback following Hawkish comments from the BoE’s chief economist, Huw Pill.
A new scheme to provide financial support for businesses, charities and public sector organisations will be cut by Jeremy Hunt. The scheme which began in October, offered financial support to businesses to help with their energy bills. Hunt made the announcement on Monday at the House of Commons.
Yesterday was another good day for London’s stock markets as equities in London extended gains for the fifth consecutive day. On Monday, the benchmark FTSE 100 closed near record levels above 7,700 points. Those gains were largely driven by real estate, materials, and energy stocks.
In the eurozone, euro watchers were pleased on Monday as the single currency edged higher to $1.07 against the US dollar. This brought the euro closer to its seven-month highs against the dollar.
Meanwhile, warmer weather in Europe means UK natural gas contracts remain at their lowest level since June last year. In addition, the eurozone’s annual inflation rate hit a four-month low on Friday. However, in the grand scheme of it all and excluding energy, inflation in the euro area is still at record levels. Markets will see the latest rate next Wednesday.
Over in the US, the dollar weakened dramatically against several of its major rivals on Monday including sterling and the euro. This follows fears that the Federal Reserve could soon ease its foot off the gas with its monetary policy tightening.
Last week, markets worried as weaker-than-expected ISM manufacturing and services data fuelled recession concerns. On Thursday, all eyes will be on the CPI report for further insight into the Federal Reserve’s next move.
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