Since Monday’s sharp fall and then recovery, sterling has been relatively quiet, albeit weakening slightly against the US dollar.
The UK housing markets experienced a shock yesterday as, faced with a large potential interest rate rise in the next few weeks, some of the largest mortgage lenders in the UK began restricting new mortgage products. Meanwhile, the growing backlash against Kwasi Kwarteng’s £45bn tax cuts continues as the International Monetary Fund (IMF) is now urging the UK government to “re-evaluate” tax cut plans. It warns that the “untargeted” package will increase inflation.
Germany’s GfK consumer climate has hit a new record low this morning as the indicator fell to -42.5. This marks the 4th consecutive low, and is worse than market forecasts of -39. The latest reading can be attributed to the current concerns over eurozone inflation, soaring energy costs and ongoing recession fears. As well as this, Germany’s economic expectations have plummeted to -21.9 which is they lowest it has been in 13 years.
With the war on inflation still ongoing, and with US borrowing costs at the highest level they’ve been since 2009, market watchers can expect five speeches from the Federal Reserve’s rate-setting committee, the FOMC today. In its September meeting, the Fed raised the interest rates by 75 basis points and policymakers anticipate further rate hikes to control soaring inflation.
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