GBP/EUR lost around a third of a per cent this morning on the back of the UK’s weaker than expected GDP figures. Sterling was down around two-tenths of a per cent against the US dollar, a fall that began yesterday on the back of sticky US inflation data.
UK unemployment held steady at 4.2% in October, but this morning’s GDP data was arguably even more crucial. Forecasts expected growth to have flatlined in October, which is why the news of a contraction of 0.3% came as such a disappointment. That is set against GDP growth of 0.2% in September, and an ominous sign that the Bank of England’s lending rates are starting to drag on economic activity.
Europe and the UK in particular have found it hard to emerge from the shadow of inflation. The US has had a smoother path towards normalisation, but yesterday’s core figures showed the battle is far from over. While the headline figure fell to 3.1% in November from 3.2% the month before, core inflation ticked up to 0.3% month-on-month against an expected 0.2%.
The eurozone had a good day on the data front yesterday. The German ZEW Economic Sentiment Index and its Europe-wide version both bounced up far higher than expected, in the European version’s case around ten points higher than forecast.
The Federal Reserve will gather on Wednesday afternoon (that’s Wednesday evening on this side of the Atlantic) to announce their latest interest rate decision. Don’t expect much of a bombshell, but whatever is discussed at the subsequent press conference will surely be picked over in detail by currency watchers.
Delegates at the COP28 climate conference have agreed a landmark deal to “transition away” from fossil fuels. While commentators have pointed out various loopholes in its language, the deal represents progress in the world’s battle to overcome climate change.
UK utility Thames Water is facing more than £1bn in debt repayments next year. The company currently sits on a mountain of debt estimated at £15.7bn as its executives prepare to be grilled by a parliamentary committee.
Rishi Sunak has narrowly avoided a damaging legislative defeat over his migration bill. The prime minister has spent much of this week franticly rallying the various factions in the conservative party to prevent a revolt, but he may face more peril in January after the winter recess.
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