The pound fell against the euro and US dollar yesterday, losing about 0.5% and 1.5% respectively from the day’s highs. There has been little movement this morning.
The big influence came from Federal Reserve chair Jerome Powell, who spoke in US Congress at 4pm UK time. In his prepared comments, Powell said, “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated.”
He warned that the US central bank is primed to increase the pace of rate hikes should incoming data exceed expectations. US stocks were paused ahead of Powell’s testimony and the US dollar rallied following his hawkish remarks.
On a similar note, Catherine Mann, an external member of the Bank of England’s Monetary Policy Committee warned of further sterling weakness. She told US news outlet Bloomberg that the pound could come under weakness if the hawkish tones from the Fed and ECB continue.
It’s been a positive week for UK data, with Monday’s new car sales and construction PMI both shooting up. Yesterday the year-on-year retail sales shot up to 4.9% after a 3.9% rise in January and above market expectations of 2.1%
In lighter news, a report from Nationwide revealed UK holiday bookings spiked in January 2023 despite the cost-of-living crisis. If you’re looking to purchase property overseas, have you got your ticket to Your Overseas Home’s virtual property event on Saturday 25th March? It’s an unmissable event for aspiring overseas buyers.
The National Grid put two backup coal units into action yesterday for the first time since winter. The plant in question was EDF’s West Burton A plant in Nottinghamshire. This was in prep for the cold weather scheduled last night.
Yesterday factory orders in Germany unexpectedly increased 1% month-on-month in January. This was above market expectations of -0.8%.
Today, we’ll receive readings for the US’ trade deficit, another testimony from Jerome Powell, JOLTs job stats and Canada’s balance of trade.
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