The pound lost 1% against the euro yesterday ahead of the UK inflation data and the Bank of England’s interest rate decision on Thursday. This morning sterling has regained some ground.
Also this morning, UK inflation rose unexpectedly to 10.4% from 10.1% in January. Economists forecasted a 0.5% fall to 9.7%. Readings show food inflation was the highest since 1977 due to shortages of fruit and vegetables.
In a committee meeting with the parliamentary Economic Affairs, chancellor Jeremy Hunt made hints that inflation remains a chief concern for the economy. He said, “We will try and reduce inflation in a way that maintains stability. But we should remember that inflation in itself is also destabilising.”
The banking industry continued to unravel yesterday as Credit Suisse made comments on the fate of jobs in London’s financial district, saying they could be at risk following UBS’ rescue of Credit Suisse.
The FTSE 100 posted its best daily gains since November 2022 yesterday, closing 136 points higher at 7536 points, representing a gain of 1.79%.
Supermarket chain Tesco, angered customers yesterday after it announced cuts to the value of its money-saving Clubcard scheme. Tesco said it will double rather than triple the value of points when spending from mid-June.
Yesterday the ZEW indicator of economic sentiment for Germany fell much more than expected to 13 in March from 15.1 a month prior. Markets expected a rise to 19.1 but high levels of uncertainty in the international markets pulled the sentiment down.
Inflation in Canada fell more than expected yesterday to 5.2%, below market expectations of 5.4% and slowing from 5.9% in January.
This evening the Federal Reserve is due to make an interest rate decision. The rate is forecast to rise by 25 basis points, which would take the March rate to 5.0%. The decision is to be followed by a press conference with the Fed which economists will continue to digest well into tomorrow.
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